Although you can file Chapter 7 or Chapter 13 bankruptcy on your own, it often makes sense to hire a lawyer.
Bankruptcy laws don’t require debtors to have an attorney to file for bankruptcy relief. You are allowed to represent yourself in Chapter 7 or Chapter 13 bankruptcy as a pro se debtor. But it's not always a good idea. Whether you should hire an attorney to represent you in bankruptcy depends on:
- whether you are filing for Chapter 7 or Chapter 13 bankruptcy
- the amount of income and property you have
- how complicated your bankruptcy is
- whether or not you are comfortable with handling your own case.
You May Be Able to File on Your Own if You Have a Simple Chapter 7 Bankruptcy
If you have a simple Chapter 7 bankruptcy, you will have a better chance to successfully file and complete your case without an attorney. A simple Chapter 7 bankruptcy typically means that:
- your household income is below your state’s median income level
- you have little or no property
- you haven’t made any recent property transfers or payments to preferred creditors (learn about when the bankruptcy trustee can void a transfer and recover the property for your creditors), and
- your creditors are not likely to claim that your debts are nondischargeable in bankruptcy.
But keep in mind that even filing a simple Chapter 7 bankruptcy requires a fair amount of time and research on your part. If you want to successfully complete your case, obtain a discharge, and not put any of your property at risk, you have to:
- accurately fill out several bankruptcy forms and schedules
- learn how bankruptcy laws work
- research your state’s exemptions
- follow all the rules and procedures necessary to complete the bankruptcy process.
When Might You Need a Bankruptcy Attorney?
In many cases, it will be in your best interest to hire an attorney to handle your bankruptcy.
You Are Filing for Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a powerful financial tool that can allow you to:
- catch up on your missed mortgage or car loan payments
- eliminate unsecured junior liens (such as a second mortgage) from your home through lien stripping, or
- reduce the principal balance or interest rate on your car loan with a cramdown.
- But a Chapter 13 bankruptcy is typically much more complex and labor intensive than a Chapter 7. In general, if you want the court to confirm (approve) your Chapter 13 bankruptcy, you must propose a feasible repayment plan that is fair to all of your creditors (which usually requires extensive bankruptcy law knowledge and is difficult to do without the expensive programs many attorneys use).
Further, if you wish to strip your second mortgage or cram down your car loan, you will need to file additional complicated paperwork with the court. For these reasons, it’s generally in your best interest to hire an attorney to file your Chapter 13 bankruptcy.
You Have a Complex Chapter 7 Bankruptcy
While you may be able to handle a simple Chapter 7 bankruptcy on your own, it generally makes sense to hire an attorney for more complicated cases. In most cases, it’s a good idea to hire an attorney to handle your bankruptcy 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 may be at risk if you file
- own a business
- have debts that may not be dischargeable in bankruptcy
- recently transferred valuable assets out of your name
- have creditors that may challenge your discharge.
You Don’t Want to File on Your Own
Filing even a simple Chapter 7 bankruptcy can be a daunting task to do without an attorney. If you don’t believe that you can manage the entire bankruptcy process on your own (or are not comfortable with it), it may be in your best interest to get an attorney to prepare your case and represent you.
What if You Can’t Afford a Bankruptcy Attorney?
While having a bankruptcy lawyer on your side will almost always be better than filing on your own, not all debtors can afford an attorney. (Learn more about your options if you can’t afford a bankruptcy attorney.)
In general, if you can’t afford a bankruptcy lawyer, you might consider:
- getting help from a free clinic or legal aid society in your area
- finding a pro bono attorney to handle your case free of charge or at a reduced rate
- paying your attorney fees through your Chapter 13 plan.