As with many matters of legal concern, the need to hire an attorney will depend typically on how complex the bankruptcy is and the type.
By law, you are not required to hire an attorney when filing for bankruptcy, but.n most cases hiring the services of an experienced bankruptcy attorney may be more advantageous than you think. Filing for bankruptcy is not a simple matter and for the inexperienced will take both time and plenty of research. There are specific forms that must be completed properly and time frames that have to be complied with.
When can the use of an attorney be avoided?
If the bankruptcy is quite straightforward there is a better chance of a successful completion and the receipt of a discharge without an attorney’s assistance. This applies more to a Chapter 7 bankruptcy than any other.
A less complex bankruptcy application will apply if your income falls below the average in the state where you live, you do not own many assets or have any serious outstanding debts, and you don’t have anyone accusing you of financial fraud. In that case you could probably manage without an attorney.
However, even a very simple Chapter 7 bankruptcy attracts a large amount of paperwork as well as gathering up other financial documentation, researching bankruptcy and any exemption laws, and following local court procedures and rules.
For a more complex Chapter 7 bankruptcy application, such as if you are the owner of a business, have significant assets, have income above the average or have a creditor who has threatened you with a fraud claim, you will benefit from the help of an attorney. If any of the above applies to you and you have deficiencies in the material you put before the court, you run the risk of having your application dismissed and alternate orders made for the sale of your assets
When might you need an Attorney?
An attorney’s role is of more relevance in a Chapter 13 Bankruptcy. Some people choose to file a Chapter 13 bankruptcy as a substitute for a Chapter 7. A Chapter 13 applies if your income is too high to qualify for a Chapter 7, or you have the ability to restructure your debts to make repayments. You can restructure your debts to catch up with arrears on a mortgages, gett rid of a second mortgage, reduce either the time or repayment costs of car loans, or to paying back priority debts. This is obviously a more complex process than a Chapter 7.
Along with the filing of bankruptcy forms you need to offer a plan for repayment. This type of plan can be difficult to compile based on the priority of your debts, applicable interest rates and what type of repayment schedule might be accepted by your creditors.. Also, particular actions like restructuring a second mortgage or changing the terms of your car loan will normally require filing extra paperwork with the court.
If you are not comfortable with any aspect of the bankruptcy process, you should consider hiring an attorney who will prepare the forms, attend any hearings with you, and help you through this often traumatic process.