Once you've made a decision to file bankruptcy the next thing you'll need to do is find a bankruptcy attorney. Chances are, like most people, you've decided to file bankruptcy because you cannot meet your debts.
You may think one smart way of saving money is to avoid hiring a bankruptcy attorney, after all, it's just a bunch of forms to fill out and present to the court, right? No, you're wrong and you could be jeopardizing your financial future if you opt to file on your own – which is known as "pro se".
The Odds are Against You
California residents and businesses file more petitions annually pro se than any other state in the country. According to some studies, if you're considering a reorganization petition, the odds are not in your favor. In fact, California reorganization plans are accepted in fewer than 1% of all cases when the applicant is not working with an attorney. This is definitely a problem if you're considering restructuring your debt; after all, you've spent all this time creating a plan and now you have to start over from scratch.
The statistics are not much better for those who are filing Chapter 7. Keep in mind, Chapter 7 filings eliminate most of your unsecured debt. However, the same study showed that petitioners who used an attorney only had their cases dismissed by the court 5.4% of the time versus 40% for those who were representing themselves. Even in cases where the court didn't dismiss a pro se case, only 36% of bankruptcy filings were ever discharged.
Why Having an Attorney is Important
Keep in mind, there are numerous people you're going to deal with during the bankruptcy process. The Clerk of Courts, a Trustee and a Judge to name a few. However, none of these people are there to protect your interests nor are they there to provide you with legal advice. In fact, in nearly all cases, they are prohibited from offering you legal advice.
Unless you have a solid understanding of federal bankruptcy statutes as well as the state specific statutes that apply to your bankruptcy case, you need an attorney representing you and protecting your interests. Otherwise, you'll have wasted not only time, but you'll have wasted your filing fees and you could jeopardize your ability to file a new petition for bankruptcy. Keep in mind, a bankruptcy filing will also show up on your credit report – unlike a discharge of bankruptcy, if the bankruptcy petition is denied or otherwise terminated, it will show as an open bankruptcy.
The Legal Details of Filing for Bankruptcy
There are numerous issues which you must address when you're considering filing bankruptcy. You must claim all of your assets as well as your debts. In addition, if you're filing to have your debt reorganized, you can't simply use random figures about what you think you can afford. The plan must be comprehensive and must be acceptable to the courts. Most of us, without proper legal training, will have a hard time creating an acceptable plan.
There are many details, which may seem minor, that must be addressed during a bankruptcy filing. Remember, you have to meet counseling requirements, if you're filing Chapter 7 or Chapter 13. You'll also need to complete a Debtor Education course before your debts can be discharged. If you considering doing it by yourself, think again. It could be a costly mistakes.