“I can Look Up the Law and Do it Myself, Right?”

Before the bankruptcy code was dramatically changed in 2005, completing a simple Chapter 7 or even a Chapter 13 petition could be done with some self-help legal books or advice from a legal advisor. Even then, however, legal fees were not high and having attorneys or their legal staffs complete the petition reduced the chances of having to make revisions.

The new code, however, introduced a number of conditions to determine if a debtor qualifies to file for Chapter 7 protection. Also, with the housing crisis and the upsurge in foreclosure filings and the unemployment rate, debtors facing financial Armageddon would be well-served if they received advice from an experienced bankruptcy lawyer to see if bankruptcy was right for their situation and what pitfalls awaited them.

Eligibility Requirements

Before you can file for a Chapter 7, you need to pass a means test. Each state has its own median income and your income must be below that figure. Your income is your average monthly income in the 6-months before you file. An attorney can advise you regarding what constitutes income, such as wages, tips, commissions, unemployment income, pension, and real property income.

If your income is more than your state’s median level, you could still qualify if you have inadequate disposable income. Having an attorney determine and advise you on this is essential or you may forego filing, or you might decide to file a Chapter 13 when you could have had your debts discharged in a Chapter 7 and saved a great deal of money and stress.

Documentation

Trying to complete the petition on your own can be daunting. You will need to produce evidence of your debts, show your monthly expenses, banking information, pension, life insurance, mortgage, auto loans, and proof of equity in autos and other large property items. You are entitled to certain exemptions with certain limited amounts, but an attorney can advise you how to convert nonexempt into exempt property and avoid its seizure by the trustee.

Complications

There is nothing worse than representing yourself and facing a complicated legal issue that you have no idea how to resolve, and which could have serious consequences for you.

Preventing legal entanglements and complications is a major reason people hire attorneys. If you do it right the first time, it is less costly and stressful.

For example, if you transferred property to a family member 90 days before you file, it could be voided by the trustee and the property seized. You could also have used the wrong exemptions or miscalculated them and could lose property that advice and representation from a bankruptcy attorney could have easily saved.

Homeowners facing foreclosure or who have second mortgages can benefit from an attorney who could forestall the process, save your home in some cases, and eliminate second mortgages.

Failing to list all your debts and assets is a common mistake by debtors and can lead to serious problems. Also, at your creditor’s meeting, you may not understand a question by the trustee who could suspect you of fraud. If creditors are there to question you, having an attorney to assist you could save you from making embarrassing responses to questions you do not fully understand and which lead you to turn over property that you should have retained.

There are also deadlines you must meet.

Finally, if you are filing a Chapter 13 or a Chapter 11, do not attempt under any circumstances to wade through the paperwork involved and the legal issues presented. Retaining a bankruptcy lawyer can only ensure that your petition is filed correctly and your assets protected.