Although you can file Chapter 7 or Chapter 13 bankruptcy on your own, it often makes sense to hire a lawyer.
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:
- the bankruptcy chapter filed
- the amount of your income and property
- the complexity of the matter, and
- whether you're comfortable researching and handling your case.
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.
Can I File for Bankruptcy Without a Lawyer?
Yes. Bankruptcy laws and rules don't prohibit you from filing for bankruptcy without hiring counsel. However, a bankruptcy lawyer must represent businesses filing for bankruptcy. 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.
How Hard Is It To File for Bankruptcy on Your Own?
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:
- Your household income is below your state's median income level, allowing you to qualify without taking the second, more challenging portion of the Chapter 7 means test.
- You don't own much property and can protect everything you own with bankruptcy exemptions. Bankruptcy exemptions are the laws that explain which property you can keep in bankruptcy.
- You haven't made payments to your favorite creditors, such as family members and business partners, during the past year (learn how the trustee can recover the property for your creditors).
- You don't have creditors you think will claim you committed fraud or dispute your right to a discharge canceling a debt.
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?"
How Do You File for Bankruptcy Without a Lawyer?
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:
- accurately fill out several bankruptcy forms and schedules
- learn how bankruptcy laws work
- research your state's exemptions, and
- follow all the rules and procedures necessary to complete the bankruptcy process.
It also helps to purchase a do-it-yourself book, such as How to File for Chapter 7 Bankruptcy by Attorney Cara O'Neill.
When You Won't Want to File Without a Bankruptcy Attorney
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 unsure whether you need a bankruptcy lawyer.
Why You Wouldn't Want to File Chapter 13 Without a 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:
- catch up on missed mortgage or car loan payments over time
- eliminate unsecured junior liens (such as a second mortgage) from your home through lien stripping, or
- reduce your car loan's principal balance or interest rate with a cramdown.
You Must Draft a Chapter 13 Plan
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.
You Might Need a Motion or Adversary Proceeding
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.
You'll Likely Encounter Other Issues
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. 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.
Why You Wouldn't Want to File a Complicated Chapter 7 Without a Lawyer
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:
- have a significant amount of income that might potentially disqualify you from filing a Chapter 7 (learn about the Chapter 7 bankruptcy means test)
- have a lot of assets that might be at risk
- own a business
- have debts that might not be dischargeable in bankruptcy
- recently transferred valuable assets out of your name, or
- have creditors that might challenge your discharge.
Also, hiring a bankruptcy lawyer is best if you aren't comfortable navigating the bankruptcy process.
If You Don't Want to File Without a Bankruptcy Lawyer
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, such as 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.
Personal Referrals
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.
Group Legal Plans
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.
Lawyer-Referral Panels
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.
Online Directories
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 checking out www.nacba.org, which provides contact information for National Association of Consumer Bankruptcy Attorneys members.
If You Can't Afford a Bankruptcy Attorney
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:
- getting help from a local free clinic or legal aid society, or
- finding a pro bono attorney to accept your case at a free or reduced rate.
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
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.
Legal Clinics
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.
