It’s a common situation. One needs to file bankruptcy but cannot afford a bankruptcy lawyer. Can you afford a good lawyer? Or, can you perhaps file your own bankruptcy? The answer is, it depends.
If you need a lawyer, then you cannot afford not to pay one. However, if you have a really simple case, you may be able to file the case yourself. There are lots of horrible stories about people who filed a bankruptcy without the assistance of a lawyer, but should have had one.
For example, consumers sometimes use petition preparers from out-of-state to help them complete the bankruptcy paperwork. If not done correctly, once the paperwork is filed with the court, the problems begin. For example, if you are going through a divorce, you should hire a lawyer. Sometimes people in divorce borrow money from family to pay bills or pay off the spouse. Sometimes these loans are secured by a deed of trust on the home.
If not done properly, and a lawyer would know how to navigate this thorny problem, a bankruptcy trustee could end up with the home. This can happen if the mortgage is recorded within just a few days of the bankruptcy filing. Under these circumstances, the trustee will take the position that the mortgage on the house is not valid, and the trustee will try to take the house. Of course, a petition preparer would not know this, and even if he or she did know, they cannot practice law, and advise the consumer that there are problems ahead.
This is just one example of how a case should not be prepared by a petition preparer or the consumer without an attorney. Divorce is quite complicated in a bankruptcy. In fact, many inexperienced attorneys do not know what to look for. Clearly, this person should have seen an experienced bankruptcy attorney. How could an experienced bankruptcy attorney have helped? The lawyer would know how to structure the transactions necessary in the divorce in a way that would obtain the desired result for the client. These situations arise frequently, as financial stress and divorce are often present in the same case.
But what if its really a simple case? What about the situation where a person has no divorce pending, has only credit card debt and drives an older car worth no more than a thousand dollars? The person makes only minimum wage and needs a bankruptcy filed to stop a wage garnishment filed by a credit card creditor who sued him and got a judgment he is now collecting. He owes about fifteen thousand dollars in credit card debt, has no secured debts, and has no prior bankruptcy cases on his record. He has a few years of college and can read instructions to file his own case. Could this fellow file his own bankruptcy if he has the correct instructions and information? He probably could. I have seen it done successfully several times. Moreover, since he is being garnished, he cannot afford to pay the cost of a bankruptcy attorney. In fact, it will be hard for him to pay the filing fee and credit counseling fee. This is the kind of situation that makes sense for a consumer to file himself without a lawyer.