It's common to want to know how to file for bankruptcy without a lawyer when funds are short. But whether it will be a good idea will depend on the circumstances. For instance, while most people with a simple Chapter 7 case can learn how to file for bankruptcy without a lawyer, most Chapter 13 cases are too difficult to navigate without legal help.
When determining whether filing bankruptcy without a lawyer will be a good idea, consider the following factors:
You'll also want to learn about the differences between Chapters 7 and 13 and, if you own a business, why you'll have no choice but to hire a bankruptcy lawyer when putting a business in bankruptcy.
Yes. Bankruptcy laws and rules don't prohibit you from filing for bankruptcy without hiring counsel. Only businesses filing for bankruptcy must be represented by a bankruptcy lawyer. Everyone else is free to file for bankruptcy on their own.
However, filing for bankruptcy without legal counsel might not be a good idea if you're at risk of losing property in Chapter 7 or can't put together a complicated Chapter 13 plan. In both cases, hiring an attorney is often well worth the cost.
If you have a simple Chapter 7, you'll have a better chance of completing your case without a bankruptcy lawyer. Here's what a simple Chapter 7 case tends to look like:
Another way to spot issues you'd want to discuss with a Chapter 7 lawyer is by taking this simple, ten-question quiz—"Do I Need a Lawyer to File for Bankruptcy?"
Even a simple Chapter 7 bankruptcy case requires a fair amount of time and research if you want to obtain a discharge without risking your property. But you can do it if you're willing to learn the law and how it applies. For instance, a reasonable chance exists that you won't need a bankruptcy lawyer if you can do the following things:
It also helps to purchase a do-it-yourself book, such as How to File for Chapter 7 Bankruptcy by Attorneys Cara O'Neill and Albin Renauer.
Even though individuals can represent themselves in the right circumstances, ultimately, it will depend on the case and the comfort level of the person. Even so, it's usually best for a bankruptcy filer to hire an attorney.
We've provided a few factors for you to consider if you're not sure whether you need a bankruptcy lawyer.
Chapter 13 bankruptcy is a powerful financial tool. Because the Chapter 13 repayment plan lasts three or five years, this bankruptcy chapter can offer many benefits not available in Chapter 7. For instance, here are some things you can do in Chapter 13 that you can't do in Chapter 7:
However, you must prepare a plan to pay creditors for three or five years. Drafting a confirmable plan is challenging without legal knowledge and the software bankruptcy lawyers use. The court won't approve or "confirm" your Chapter 13 bankruptcy—which must happen to get started—unless you can propose a feasible repayment plan.
Further, taking advantage of some Chapter 13 benefits—such as paying less on your house or car by stripping a second mortgage or cramming down a car loan—can be even more complicated. You'll need to file a motion or adversary proceeding with the court, which isn't an easy task.
Also, you must be able to address any problems that arise during the repayment period, such as a decrease in income or the need to finance a new car or an expensive appliance that has broken down. All of these intricacies make Chapter 13 bankruptcy considerably more complicated and labor-intensive than Chapter 7.
Learn more about releasing liens in bankruptcy through lien avoidance.
While you might be able to handle a simple Chapter 7 bankruptcy independently, hiring an attorney for more complicated cases makes sense. For instance, it's a good idea to hire an attorney if you:
Also, hiring a bankruptcy lawyer is best if you aren't comfortable navigating the bankruptcy process.
If you want the legal support provided by a bankruptcy attorney, you'll need to find a lawyer you can trust. Start by looking for an experienced bankruptcy lawyer—someone who has filed a significant number of bankruptcy cases—not a general practitioner.
Not only does bankruptcy require understanding how many principles interrelate, but making a mistake can be costly. Most lawyers won't accept a bankruptcy matter unless they practice bankruptcy law regularly.
Here are some suggestions for finding the best bankruptcy lawyer for your job.
Someone who can refer you to a good bankruptcy lawyer is often your best source, and you'll want to call that lawyer first. Your lawyer might know a good bankruptcy lawyer, as well. Or, if a family member or a friend used a lawyer in a nonbankruptcy matter, ask for a bankruptcy attorney recommendation.
If you're a member of a plan that provides free or low-cost legal assistance and the plan covers bankruptcies, make that your first stop in looking for a lawyer.
Most county bar associations will give you the names of bankruptcy attorneys who practice in your area. Keep in mind that bar associations don't screen the lawyers. It's up to you to check out the credentials and experience of the person the bar association refers you to.
You can also find lists of bankruptcy lawyers online. A helpful directory will provide information about the lawyer, such as the types of cases they handle, their philosophy on representing clients, and typical fees.
Consider using Nolo's lawyer directory at www.nolo.com/lawyers. Also, check out www.nacba.org, which provides contact information for National Association of Consumer Bankruptcy Attorneys members.
While having a bankruptcy lawyer on your side will almost always be better than filing yourself, not all debtors can afford legal counsel. If it isn't a possibility, you might consider the following:
You might also find paying most of the attorneys' fees through a Chapter 13 repayment plan cost effective. Some lawyers charge as little as $100 to start a Chapter 13 case, allowing you to pay the rest in installments through the plan. But this option isn't available in Chapter 7. You'll pay all Chapter 7 fees beforehand; otherwise, the bankruptcy court will erase the remaining amount owed along with your other debts.
Legal Aid offices offer legal assistance to low-income people in many areas of law. A few offices do bankruptcies, and it would be more likely for a Chapter 7 filer to find help. It's unlikely that higher income earning Chapter 13 bankruptcy filers would qualify.
Many law schools sponsor legal clinics and provide free legal advice to consumers. Some legal clinics have income requirements similar to Legal Aid. Others offer free services to low- and moderate-income people.
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.