Do I Require the Services of a Bankruptcy Attorney?

What is the Role of a Bankruptcy Attorney?

Because the term “bankruptcy” conjures such terrible connotations, people often overlook the actual reason for filing: getting out of debt.

  1. A) It protects you against creditors; and 
  2. B) It relieves you of some, if not all, of your financial responsibilities.

And that is precisely what a bankruptcy lawyer should do: protect your assets from creditors and find a method to relieve you of your financial obligations.

While it is possible to file for bankruptcy “pro se,” or on your own, statistics show that hiring an attorney, regardless of whether you select Chapter 7 or Chapter 13, would result in a far better outcome.

Lawyers represented customers in 91.5 percent of the 486,347 Chapter 7 cases filed in 2017, according to Ed Flynn of the American Bankruptcy Institute. In 96.2 percent of instances, lawyers could have their clients’ debts dismissed, which means they were no longer liable. To put it another way, 428,097 individuals were able to leave court debt-free.

People who represented themselves in Chapter 7 bankruptcy proceedings, on the other hand, were only successful 66.7 percent of the time.

Consumers who file for Chapter 13 bankruptcy face even more dire statistics. Consumers who represented themselves were only successful 2.3 percent of the time. When a lawyer represented a client in a Chapter 13 case, that percentage jumped to a 41.5 percent success rate (debts were dismissed after completing a repayment plan).

A bankruptcy lawyer may be your ticket to a new start if your financial situation has deteriorated and you seek protection from creditors and freedom from debt obligations.

What Should I Look for in a Bankruptcy Lawyer?

Bankruptcy, like other legal issues, is a process, and if you want to succeed, you need to have an expert assist you through it.

If a competent bankruptcy attorney provides at least these four services, you will have peace of mind:

  • An initial consultation – typically free! – to get a better understanding of your situation.
  • Advice on the many choices available, including which bankruptcy to file.
  • To file for bankruptcy, you must have all of the required documentation completed.
  • When the matter gets to court, representation is provided.

A 30-minute to 60-minute consultation with a lawyer kicks off the bankruptcy procedure. If you’re married, both of you should go so that all of your questions may be addressed truthfully and correctly. Your choices, including the possibility of filing bankruptcy without a spouse, will be laid out by the attorney.

It’s not a good idea to make educated estimates about how much you owe, and the attorney will need documentation to support your claims about how many assets you have and how much money you owe. If you want an honest and accurate evaluation of your condition, don’t keep anything back. The quality of the legal advice you get is only as good as the information you supply.

When the attorney has sufficient documentation to assess your case, he should guide continuing. A competent lawyer will not always advise you to file for bankruptcy. It’s conceivable that a less extreme solution, such as debt settlement or a debt management program, may address your issue.

If you decide to file for bankruptcy, an attorney’s next step is to submit papers with the court. Remember that the attorney’s job is to preserve as much of your assets as possible, so tell them what matters most to you.

Depending on the kind of bankruptcy, the following step is different. You would go before a Chapter 7 trustee to review your bankruptcy petition in a Chapter 7 case. When you employ an attorney, these sessions are usually easy since you provide detailed and comprehensive schedules and backup documents to the trustee. In most instances, your lawyer has already done all of the legwork.

Things may become complicated in a Chapter 13 case. You must not only meet with the Chapter 13 trustee, but you must also submit a Chapter 13 Plan that the Court will approve. When filing without the help of a lawyer, this is the most difficult phase. To be “confirmed” by the court, your Chapter 13 Plan must satisfy all the Bankruptcy Code’s criteria.

Do I Require the Services of a Bankruptcy Attorney?

Consumers may opt to employ an attorney or represent themselves in bankruptcy, but as the statistics from the American Bankruptcy Institute shows, choosing an attorney has a significant benefit.

This subject’s math is mind-boggling:

  • Only one out of every twenty-five people who file Chapter 7 with the help of an attorney is refused a release. One out of every three people who file on their own will not be discharged.
  • Only approximately one in every 50 customers who file for Chapter 13 bankruptcy gets a discharge. If you hire a lawyer, your chances of success will be greater than four out of ten.

The reasons are self-evident. Bankruptcy is a complicated topic. Creditors demand to be paid even if they claim they don’t have the funds. On both sides, lawyers are attempting to persuade courts that their client is correct.

If you have no prior expertise submitting legal papers or persuading others to believe your argument, you may lose your case due to absurdly easy errors. An experienced attorney is aware of the documents that must be submitted and the dates fulfilled. An experienced attorney is familiar with the courts involved and the arguments that must be made to get the desired outcome.

Not only that, but improperly filling out the papers may have catastrophic consequences. It’s quite conceivable that a paperwork mistake may allow the Chapter 7 trustee to sell your home! These errors are uncommon when employing an attorney, but they do often happen when individuals file on their own.

That is why hiring an attorney has a much better success rate than filing on your own.

Is it Possible for a Consumer to Do This Pro Se?

It is feasible to file for bankruptcy pro se (on your own) and be successful if you have a lot of time, patience, and dedication, as well as a good knowledge of legal procedures and terminology.

It’s not a good idea, but it’s feasible.

Bankruptcy proceedings are heard in federal courts, which poses an immediate issue. To submit a case, you must complete and file your petition in a certain manner; otherwise, a court will never hear it.

There’s also the issue of submitting all required papers for either a Chapter 7 or Chapter 13 bankruptcy. If you leave out even one document, your case may be rejected.

The United States Court System has simplified the procedure by providing a fillable PDF form that may be used to submit a Chapter 13 file. They want to eventually make all required paperwork accessible online, making it simpler for pro se filers to manage their cases. However, this does not fix all issues. The availability of documentation is just one problem. You must understand how to fill it out properly.

Then there’s the issue of arguing your case in front of a judge, who is familiar with the law, processes, and remedies for various circumstances and may dismiss your case at any moment if you don’t follow them.

Yes, you may file for bankruptcy on your own, but you must understand that you are doing it at your own risk.

Signs You Need a Bankruptcy Attorney

Financial hardship does not usually occur overnight or without warning. It’s typically a slow process, with numerous flare warnings appearing as the situation worsens.

When warnings go unheeded, your money may go up in flames, and there’s nothing you can do about it except declaring bankruptcy.

The following are some telltale indications that you’re on the verge of filing for bankruptcy:

  • On past-due debts, you just make the bare minimum monthly payments.
  • Your credit cards are maxed out, and your debt is increasing rather than decreasing month after month.
  • You pay for everyday expenditures using credit cards, such as food, rent, and utilities.
  • Every month, you pay overdraft fees.
  • Collection agencies are contacting your home 24 hours a day, seven days a week.
  • Creditors are suing you or threatening to sue you because you haven’t paid your bills.
  • You are ineligible for debt-relief options such as debt management or consolidation loans.
  • A job loss, divorce, or medical setback may completely destabilize your finances.

Bankruptcy isn’t always the first choice for debt relief, but it may be a viable alternative in certain situations. There are, of course, certain drawbacks. It may harm your credit for up to ten years and make it difficult to get security clearances.

If you cannot address your issues in fewer than five years, bankruptcy may be a possibility.

How Much Do Bankruptcy Attorneys Cost?

The cost of a bankruptcy lawyer varies based on the kind of bankruptcy you select, the complexity of your case, and your location.

A Chapter 7 bankruptcy costs $1,500, whereas a Chapter 13 bankruptcy costs $3,500. A filing charge of $338 for Chapter 7 and $313 for Chapter 13 is also included, as are expenses for credit counseling and financial management courses, ranging from $10 to $100.