Author: Many people are still reeling from the economic downturn and are wondering whether to file bankruptcy, and whether to file bankruptcy without a lawyer, seeing this as yet more expense.
I am not a lawyer, and am very concious of the sums they can charge, but in this instance with your financial future at stake and the complications of bankruptcy law, I would say unhesitatingly that a lawyer is essential.
There are various options open to you when declaring yourself bankrupt – the main options being what chapter to file under.
Chapter 7 is often the preferred choice as, despite having all your assets sold, you are left debt free (some debt cannot be written off) as opposed to chapter 13 bankruptcy, which is essentially a repayment plan over three to five years.
However, the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) changed the law to include a means test. This was to ensure that those who could repay in full (and the conditions can be quite harsh), did so.
This is one major reason not to file bankruptcy without a lawyer as the means test is complicated, and the result is far reaching.
You need to find a mid-sized law firm so that you always deal direct with your lawyer, not a paralegal, common in large firms. This is because your relationship with your lawyer is of the utmost importance, and there should be a free flow of questions and answers between the two of you.
Some lawyers tailor their rate to the amount you owe, others will charge a flat fee, which is the best way to go. A lawyer cannot be a creditor in a chapter 7 case, so the amount must be paid up front, as opposed to a chapter 13 case, where it can be included in your repayment plan.
Another area where a lawyer is important is at the “341 Meeting” or “Meeting of Creditors”. This meeting is called just after filing for bankruptcy.
Before the meeting you will need to draw up a list of creditors with details of how much is owed. You must also produce documented evidence of all your assets and their value, and any income you receive.
At the Meeting of Creditors, you are asked questions under oath, your financial details inspected and which chapter you should file under. It’s complicated and a lawyer should be with you to advise.
A lawyer is also able to give you sundry advice on less obvious things. For example you should not use a credit card for anything at all once bankruptcy is filed, as you are effectively spending money you know you cannot repay.
Bankruptcy is complex, and a lawyer is a vital investment.
This is just one area of declaring yourself bankrupt. For additional free information on various areas of bankruptcy, visit www.decalringyourselfbankrupt.org. You are welcome to reprint this article – but get your own unique content version here.
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