Why It’s Usually a Mistake to File Your Own Bankruptcy Petition
In today’s world, it’s not difficult to find publications and online resources that promote filing your own bankruptcy. Hiring a lawyer costs money, and lack of money is the reason you are considering bankruptcy. But too often trying to save money this way is “penny-wise and pound-foolish”.
But it’s almost always a bad idea to try to be your own lawyer in a bankruptcy proceeding. Here’s why:
- You may file for the wrong reasons—you may file because you hope to permanently discharge certain debts, such as child support or alimony, only to discover after you have filed that those debts are not dischargeable.
- You may file under the wrong chapter—Before 2005, almost anyone could file for discharge of debts under Chapter 7. You must now pass the “Means Test” a complex formula based on your household gross income for the past 6 months. When and how to apply this test has filled up volumes of case law.
- You may put income or assets at risk—you need to know how to value these, how they are treated in bankruptcy, and what can be claimed for yourself as exempt. There are state and federal exemptions. Some assets do not even need to be exempted as they are automatically excluded from the bankruptcy estate. If you do not do certain things, your car could be repossessed after a discharge even if you are current on all your car loan payments.
- You could permanently lose your right to a discharge—not making the proper disclosures, spending money you should not have, and many other mistakes could lose you your discharge, forever.
- You may fail to file required documents, or miss bankruptcy court deadlines—The bankruptcy process requires more than simply filing some papers and discharging debts. You can quickly get in over your head and miss filing deadlines, which can ultimately prevent you from reaping most of the benefits of the bankruptcy process.
- You could lose valuable rights by making gifts or paying off debts before your bankruptcy.
- In addition, there are many types of motions that can or should be filed in a bankruptcy proceeding. It’s highly unlikely that you will know what needs to be filed or understand what the court requires.
- The bankruptcy law requires that you receive credit counseling before you can qualify to file for bankruptcy protection. Without guidance from an attorney, you may seek and pay for advice from someone who does not meet the bankruptcy court’s definition of a credit counselor.
- In a Chapter 13 case, the risk and complexity go up. Getting through Chapter 13 successfully is even more daunting for the untrained. But Chapter 13 may be just what you need to meet your needs and objectives.
Contact Neuner & Ventura, LLP
We understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every client. For an appointment, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.
Representing Clients across South Jersey