Do I Need a Lawyer to File Bankruptcy?

Are you unable to pay your debts or being threatened with wage garnishments, foreclosure or repossession?  If so, you may be considering bankruptcy and you are not alone.  In the United States, bankruptcy rates continue to rise.  According to the National Bankruptcy Research Center, bankruptcies have risen from 802,000 in 2009 to 980,000 in 2010, which translates to 1 in 125 American households filing for bankruptcy.  While the economy is slowly recovering, many Americans are still struggling with the consequences of the economic crisis.  As debt rises, and jobs are still scarce, more consumers are turning to bankruptcy.  So what is bankruptcy and do you really need a lawyer?

There are many definitions of bankruptcy and one straightforward definition is that it is a legal process of consumers or businesses seeking federal protection from creditors when the borrower is unable to repay debt obligations.   Bankruptcy can give you a fresh start by canceling many of your debts while possibly giving creditors some payment.  When it comes to individual bankruptcies, there are four types.

1. Chapter 7: Is also known as the “fresh start” or “liquidation” bankruptcy and is most frequently used by individuals.  It involves a debtor’s property being liquidated in order to pay creditors and remaining debts.  Works to wipe out some or all of your debt.   
2. Chapter 13: Is good for those who cannot qualify for Chapter 7.  It creates a repayment plan for paying of debt rather than liquidating assets.
3. Chapter 12: Is similar to Chapter 13, but offers additional benefits to fishermen and farmers.
4. Chapter 11: Is a reorganizing proceeding, which is usually for individuals who have engaged in corporate enterprise.

There is much more detailed information on each of these types so please research them further to see if one of them will fit your need.   

Bankruptcy is an important decision and you should consider all of your options before choosing to file.  It is a complicated legal matter and consulting a bankruptcy attorney is the best way for you to decide if bankruptcy is the best option for you.  With all of the information available on the internet and event “kits” you can buy to help you in the bankruptcy process, you may be thinking that you can do this yourself.  Plus, if you are thinking of bankruptcy, you are undoubtedly worried about your finances and may feel that you cannot afford legal help.  While these may be easy reasons to convince yourself that you do not need an attorney, there are many more reasons why you should consult an attorney when filing bankruptcy.

1. An attorney can help you decide if bankruptcy is the best option for you and your financial situation.  They can help you weigh your other options and explain the consequences that bankruptcy can have on your credit.
2. He/she can help you determine which type of bankruptcy fits your situation.  If you file for the wrong type and fail to meet the qualifications or requirements, you will be turned down and be back to square one.
3. A lawyer will ensure that you do not miss deadlines, perform a required task, or respond properly to an action.  If you fail to do any of these items correctly, your bankruptcy case could be dismissed.
4. If you are not fully informed on all of the bankruptcy laws you may lose valuable property or rights that you may have been entitled to.
5. By filing without a lawyer, you are still held responsible for knowing all of the requirements of the Bankruptcy Code and Federal Rules.  You will not receive special consideration, and local bankruptcy courts are not allowed to provide any legal advice.
6. Most importantly, an attorney will provide you with peace of mind by answering each of your questions and standing by your side throughout the process.

While you may save money in attorney fees, you could lose thousands by representing yourself and not having the proper information.  Do not put your home, car and other assets at risk. Hire an attorney.

Once you have made the decision to consult an attorney, make sure to select an attorney who is experienced in bankruptcy cases.  Most attorneys will not charge for an initial consultation, but be sure to ask if there will be a charge.  In addition, be sure to ask your potential lawyer how much he/she will charge to represent you and ask for it in writing.  You do not want any financial surprises once your bankruptcy is complete.  Making the decision to file bankruptcy can be nerve-racking, but having the knowledge you need and a great lawyer on you side, will make the process less daunting.  You don’t need luck when you have an experienced attorney you can trust.