When a person is experiencing financial problems and knows a Bankruptcy must be filed, it is very tempting to consider filing without an attorney. However, before you start down the road of filing on your own and opening up a GOLD MINE for the bankruptcy trustee and your creditors, consider the following:
1. If you miss even one exemption for which you are entitled or the timing of bankruptcy filing is not correct, all the savings you made by filing on your own are GONE. If you do not properly exempt assets, the bankruptcy trustee WILL take your assets and sell them for the benefit of creditors. The Trustee is not there to help or educate you! Their job is to maximize the recovery for creditors AFTER paying themselves. Let me tell you that this is happening every day. I can’t even begin to tell you the number of times I have seen trustees take money from bank accounts, tax refunds, jewelry and vehicles because the Debtors did not have representation.
2. If you omit property either intentionally or inadvertently, the trustee can take the omitted property and sell it for the benefit of creditors or can move for a denial of discharge.
3. If you miss or don’t include debts, either intentionally or inadvertently, the debt may be deemed nondischargeable or the court may move for dismissal.
4. If you don’t understand the Means Test, you may not qualify for bankruptcy or may end up filing the wrong type of bankruptcy case.
5. If you have a business and your bankruptcy case is not filed properly, you may end up losing the business or assets of the business.
6. If you are on title to bank accounts, personal property or real property with relatives, the trustee or creditors may attempt to take the property even if you claim to have only bare legal title versus an equitable interest in the property. Do you understand the effect of inheritance after a bankruptcy filing?
7. If you don’t understand real property law, you may end up filing an unnecessary bankruptcy or alternatively may increase your personal and/or tax liability by completing a short sale or foreclosure prior to the bankruptcy filing.
8. If you don’t understand tax law and own real property or have significant amounts of debt, don’t even think about filing bankruptcy on your own especially if you have assets such pensions, IRA, 401k or other assets such as annuities. You don’t want to trade bank and credit card collectors for the IRS or State Franchise Board. The fact that you currently do not have equity in the property is irrelevant.
In conclusion, filing bankruptcy on your own is almost always a very bad idea and ends up costing more in the long run because of assets lost or other problems with the bankruptcy case. The above is just a few of the issues which must be addressed prior the bankruptcy filing. Bankruptcy is very complicated area of the law and is a mine field for the unwary. Even attorney who are general practitioners will not generally file bankruptcy cases because of the complexities involved in the filings. If you don’t have the money to file bankruptcy at this time, you should still seek legal counsel and discuss your options. Most bankruptcy attorneys allow payment of fees over time. Don’t be a Penny Wise and Pound Foolish. I see people every day for FREE 30 minute consultations at my offices located in Walnut Creek, Antioch and Brentwood.