Need help with debt? Need help filing for bankruptcy? Bankruptcy can be a complicated process. It is a full analysis of your financial situation. The court looks at your full situation; the court requires information about your income, debts, expenses, and asserts. Filing a personal bankruptcy under Chapter 7 or Chapter 13 takes careful preparation and understanding of legal issues. Misunderstandings of the law or making mistakes in the process can affect your rights. Many factors can impact your case that seem inconsequential, this includes payments to family, friends or even other creditors.
What a lawyer can do
Some people believe that they do not need an attorney and/or they cannot afford a lawyer. Individuals (not business) are permitted to file bankruptcy without a lawyer; this is the process of filing a case Pro Se (this is Latin for “on one’s own behalf). But, often a lawyer is necessary for a successful case. Too often you do not know the risks or potential issues until too late. The following is a list of ways your lawyer can help you with your case.
- Advise you on whether to file a bankruptcy petition.
- Determine you under which chapter you can qualify for and what chapter to file.
- Advise you on whether your debts can be discharged.
- Advise you on whether or not you will be able to keep your home, car, or other property after you file.
- Determine/calculate the tax consequences of filing.
- Advise you on whether you should continue to pay creditors.
- Explain bankruptcy law and procedures to you.
- Complete and file forms and explain what any of the questions mean.
- Select and choose any applicable exemptions to protect your assets.
- Assist you with most aspects of your bankruptcy case.
The above items are things that really only a bankruptcy attorney. A bankruptcy petition preparer (sometimes called a bankruptcy paralegal who is not working with an attorney) cannot do any of the above. A non-lawyer is only permitted to help type out and include any information that you provide; they cannot provide legal advice or advise on any of the factors (positive or negative) related to bankruptcy. There is also no confidentiality related to speaking to someone other than an attorney (unless they work with an attorney and you have hired the attorney).
Filing Bankruptcy on your own
While some cases filed Pro Se may turn out fine, we worry about those that don’t. Too often you do not find out that you are having issues until too late. It is usually harder to fix an issue during a bankruptcy case than prevent it before filing. Additionally, if you file bankruptcy more than once during an 8 year period (usually this will occur with multiple Chapter 13s) there can be issues of good faith or bars to future filing. The court reviews every case for good faith to determine if the filing was done for a proper purpose.
Additionally, if you file a case yourself and then have to refile, you may not receive the full protections from the bankruptcy filing. If you have had one case pending and dismissed in the prior 12 months, you only have a 30-day stay. If you had two or more cases pending in the prior 12 months there is no stay. You can file with the court to extend the stay, but the court has to review your filing and testimony about the case and determine the case was filed in good faith.
In a Chapter 7, a Debtor usually cannot dismiss (basically not continue) a case without court approval. This approval is rarely given. Common issues that we see with bankruptcy filed without help relate to future/pending tax refunds, incorrect house values, improper disclosures of information, preference payment to creditors, asset transfers, recent debt transactions. These issues can lead to loss of assets or failure to receive a discharge. Additionally, in some circumstances a creditor can object to having their debts discharged.
Losing of money or property during a Chapter 7 is often a person’s biggest concern. The bankruptcy court has the ability to review all assets a person has to be potentially used to pay creditors. Many assets are protected, but every situation is unique. Assets in a bankruptcy are not just things you have at the moment you file, but can also relate to things that you can be entitled to in the future. One common future asset we see problems with in Pro Se cases are tax refunds. Even if it isn’t tax season, the court can consider an upcoming tax refund if it is large enough.
Similarly, another potential issues is the right to sue someone for any damage. For example, if you were in a car accident before filing but haven’t yet sued someone for any damage or injury, your right to do so is still an asset. An experienced bankruptcy lawyer can help you figure out if any of those current or future interests could be at risk. Also important to note is that in a Chapter 7, the bankruptcy court can also have interest in any inheritances a debtor may be entitled to from anyone who dies within 6 month of you filing bankruptcy.
Qualifying for Chapter 7
Qualify for Chapter 7 can also require the proper guidance and help. Not everyone can file Chapter 7; the bankruptcy court usually requires a full financial analysis to qualify someone for Chapter 7. If you are below the median income for your state and household size, there is a presumption that you do not have money leftover to pay to creditors after necessary expenses. If your income is above the median income, you have to do a full Means; this is a complex analysis that uses some actual expenses and some imputed expenses related to your household size and the country that you reside. Only an experienced bankruptcy attorney will help you navigate qualifications; an good attorney will also determine what expenses you can deducted and if you have any future/delayed expenses that may also impact you qualifying.
In a Chapter 13, handling a case without a lawyer can make it very difficult to confirm a plan and eventually receive a discharge. A debtor filing a Chapter 13 experiences a more complex process than a person filing for Chapter 7. While filing a Chapter 13, a debtor must file and follow a plan to mange the debts. The court reviews all plans to determine if they meet all requirements under the law; the Bankruptcy Code dictates that your plan must meet certain qualifications that are dictated by factors, including income, assets, debts, and more.
Some debts have to be paid in full during a Chapter 13, like mortgage arrearages on property you are keeping, priority taxes, arrearages on support obligations, etc., and some debts are paid according to disposable income and non-exempt assets, like credit cards, personal loans, medical bills, etc. Getting bankruptcy help from an experienced attorney can make the process than much easier.
Additionally, nearly all Chapter 13 cases filed Pro Se fail. While there is no requirement that you have an attorney, being in a Chapter 13 bankruptcy for 3 to 5 years and navigating all the legal issues can be complex. Having a bankruptcy attorney’s help increases that success rate dramatically.
Virginia Bankruptcy Help
If you are concerned about your debt and want to review your options, please schedule an appointment with Virginia bankruptcy lawyer Ashley F. Morgan. She offers a few consultations for debt issues and she has helped hundred of clients both file and avoid bankruptcy.