Why You Should Never File for Bankruptcy on Your Own
One of the initial facts you learn in law school is: “only a fool has himself for a client”. It’s difficult to imagine a scenario that this truism applies more to than filing bankruptcy. Although individuals could represent themselves in bankruptcy court and file a bankruptcy case without having an attorney or “pro-se,” it is very tough to do so properly. It is vital that a bankruptcy case be planned, prepared and filed properly. The rules are very complex (the Code is over 500 pages long!), and I have observed first-hand many pro-se debtor’s have regrettably damaged their chances by filing by themselves. If you think filing bankruptcy is as easy as filling out some forms, paying a fee and then making one appearance in the courtroom, you might be putting your case in danger. It is important that a bankruptcy case be planned, prepared and filed correctly. The rules are very complex (the Code is over 500 pages long!), and I have witnessed first-hand many pro-se debtor’s have sadly damaged their chances by filing by themselves. If you believe filing bankruptcy is as easy as filling out some forms, paying a fee and then making one appearance in court, you might be putting your case in jeopardy.
Whenever you file a bankruptcy case by yourself, you’re held to the same exact standards as an attorney. “I didn’t know” won’t save your case and it won’t save you from being charged with perjury. Many cases of pro-se filers are dismissed for all kinds of reasons, making what might have been a painless, successful filing, considerably more complicated and possibly catastrophic. Allow me to share the specific reasons you mustn’t go it alone: A pro-se debtor’s case could be postponed or dismissed for failure to file a necessary document, for instance a copy of their petition and supporting paperwork to the trustee prior to the 341 Hearing. Meeting deadlines is an important factor in a successful filing. Overwhelming pressure to meet deadlines could cause your petition and other forms to be incomplete or worse, inaccurate, further delaying the process, and triggering other more complex, court measures.
Additionally, aside from the common Federal rules that apply to every case, you can find “local” rules and customs, that differ from trustee to trustee: Only an experienced Bankruptcy attorney can direct you properly. If you make a mistake and your bankruptcy petition is dismissed, it will likely set you back hundreds of dollars extra to reinstate it. Roughly 50% of pro-se filings get dismissed! There are also restrictions in place that prevent “serial filers.” They could impede you from refiling. You could end up with a bankruptcy filing on your credit record and no relief.
Sitting through several 341 Hearings, one of the most normal and perhaps damaging mistakes a pro-se debtor might make is not understanding what is considered “legal title” to assets. If your name is on a car title or on a bank account, it is viewed as your asset for bankruptcy purposes! It does not matter that it may be the car your daughter drives and pays for, or that the bank account is all your mother’s money and you’re a co-signer “just in case.” These will be considered as part of your filing. This idea is critical, as I have personally seen pro-se debtors forfeit assets they otherwise might have kept, with some simple planning. Most debtors will have to prepare a “means test”. This is a really difficult 6-page calculation, a lot like preparing a tax return, which is a detailed assessment of your income and expenses. It’s extremely complex that a majority of attorneys use special software to ensure that it is done properly. Preparing this form is essential to a successful filing. Calculating the means incorrectly might have dire consequences: dismissal of case or transfer of a Chapter 7 (liquidation) case to a Chapter 13 (repayment plan) case.
Surprisingly, Debtors will have to list all assets and all debts in their bankruptcy schedules; you don’t get to pick and choose or give a credit card out for a rainy day. If a debt is not listed, it’s possible your debt will not be dismissed. The judge can also deny the discharge of all debts if a debtor does something dishonest in connection with the bankruptcy case, for example destroying or concealing property, falsifying records, or lying. Are you aware that transferring some of your property to a relative before filing may constitute fraud? Moreover, individual bankruptcy cases are randomly audited to discover their precision, truthfulness, and completeness of the information that the debtor is required to provide. Under Bankruptcy Law, several assets are “exempt” fully (i.e., retirement accounts) or as is more common, exempt up to a specific amount (i.e. Home, car, cash in the bank). In New York, it’s not always a simple process to find out what is exempt, as there is now an option between “New York” exemptions or “Federal” exemptions, dependant upon the nature and variety of assets of the debtor. Now there are “wildcard” exemptions, which can be applied to almost any asset, it is critical to apply these correctly.
Without the assistance of an informed lawyer, you could possibly forfeit a priceless asset. For example, in New York, should you file Chapter 7 bankruptcy, your vehicle is protected providing you have less than $4000 equity in it. If you have more equity than that, you may lose your automobile. Do you have an RV, boat or second vehicle? You may forfeit them in a bankruptcy, unless you have taken the proper steps to avoid it from happening. An educated attorney will know how to handle these types of scenarios before you file. Another change instituted in 2005, was the credit counseling requirement. A course has to be completed both prior to filing and prior to discharge, and to file a statement of compliance and a certificate of credit counseling furnished by the provider. Failure to do this may result in dismissal of your case. This is routinely supplied by an experienced Bankruptcy lawyer (our office sends you links automatically), but not so easy to set up by yourself.
Although rare, creditors have the right to challenge your filing, this means they might eventually be owed some money. You will need a skilled, aggressive litigator who knows how to handle them. In the instance that your case faces opposition, the pro-se filer’s lack of expertise in responding to an Objection to Exemptions or to an Objection to Discharge could be devastating. Property loss or case dismissal can happen, both of which usually are avoided when an experienced attorney is handling your case. Some people shouldn’t file Chapter 7 but should file Chapter 13instead. This is not always an obvious decision. There are several factors that come into play, i.e. income, expenses, assets, and unusual circumstances that are particular to each filing. Meeting with a skilled bankruptcy attorney will put you in the best direction to ensure that you are filing within the right Chapter.
You might need to file Bankruptcy, but feel you are unable to afford to retain a lawyer. There are non-attorney petition preparers who solely type your information on bankruptcy forms. However, please be cautious here. Even though Petition preparers may charge cheaper than an attorney, they’re barred legally from supplying legal counsel. They can not explain how to answer legal questions or help in bankruptcy court. So even if you save a few dollars in filing, it is very often that your case could be in danger by using these services.
In sum, bankruptcy laws are quite complex and so are best approached using the legal expertise of a professional bankruptcy lawyer. Each case features its own technicalities, so working with a bankruptcy attorney who knows how to represent your specific interests to achieve the most valuable terms to suit your needs is crucial to a effective filing.
If you need a Long Island bankruptcy attorney to handle your case or to learn more about Long Island bankruptcy visit Long Island Bankruptcy Advice.
