When Filing Bankruptcy Is the Best Option

Going It Alone During Bankruptcy: Four Common Problems When Skipping Representation

Although you don't need an attorney to file for bankruptcy, it's easier to navigate the maze of paperwork and court proceedings with a skilled ally. More than 11 percent of bankruptcies filed in the U.S. are done without the aid of a lawyer, but they can put a strain on the court system due to avoidable filing errors. Before deciding to go for it on your own, consider these common problems of filing on your own first.

#1: Lack of Information

Bankruptcy isn't a catch-all solution. Assuming that bankruptcy will simply erase all your debts and allow you to continue living your life as before is a major fallacy that can result in shocking repercussions. When you try to handle a bankruptcy on your own, you leave yourself open to major errors, including:

  • Filing for bankruptcy when it will not alleviate your most pressing debts, such as student loans.
  • Losing property because you didn't know how best to protect it during bankruptcy. You can lose your car, your home, or even your business if you don't approach bankruptcy correctly.
  • Choosing the wrong type of bankruptcy for your situation. For example, those with low-income and no assets are usually better suited for Chapter 7 bankruptcy, while those trying to save their home should consider Chapter 13.
  • Starting bankruptcy proceedings when there are better options with less longterm consequences available for you. A skilled attorney can help you find which options are best for your specific situation, which can save you more time and money in the long run.

#2: Missing Paperwork

A bankruptcy requires a lot of paperwork, and each document must be filled out accurately and in a timely fashion. Missing even a single debt can set back the proceedings or result in a denial of your claim. To make matters even more confusing, your local court may require additional forms. Legal requirements also change, so it can be difficult to stay up-to-date on every requirement unless you have a lawyer.

#3: Requirement Misunderstandings

Bankruptcies come with requirements. For example, both Chapter 7 and Chapter 13 require credit counseling from a court-approved provider. Failure to undertake counseling, or doing so with a non-approved provider, can result in a bankruptcy dismissal.

Property and vehicle exemptions can be another difficult part of the process to navigate on your own. These change occasionally and listing them wrong or providing an inaccurate valuation can lead to an unnecessary seizure of property if your bankruptcy is approved.

#4: Managing Obstacles

Although most bankruptcy proceedings go smoothly, it's a good idea to have legal help in case you're thrown a curve ball. If a creditor refuses to discharge a debt or accuses you of fraud, you will need to defend yourself against the action. A bankruptcy attorney can help prevent these occurrences and help you navigate the process if they do occur.

Although it's better to seek out representation before you begin the proceedings, it is possible to secure a bankruptcy attorney even you began the process on your own. Professional and knowledgeable advice can help make a difficult time more bearable.