Can you file for bankruptcy on your own?
You are having a hard time keeping up with your bills, money is tight, and the last thing you may want to do is to spend a couple of thousands of dollars on a bankruptcy lawyer. So you ask yourself, do I really have to have a bankruptcy attorney? Can I simply file my case on my own? After all, I have read all kinds of stuff on the internet and we are after all in the “DIY” (do it yourself) era are we not? The answer is yes, of course, you can file your bankruptcy case without the assistance of an attorney, but (you knew there was going to be a “but” right) you may quickly find out what people mean when they use the phrase “penny wise and pound foolish.” Case in point, see what one individual posted on www.lawguru.com a couple of weeks ago:
“how can I get a dismissal of a filed chapter 7. I have a car that is NOT mine but belongs to my son, but was titled in my name to get a better rate on insurance. Now the trustee wants to sell my sons car to pay my debts.” In other words, what they are saying is they filed a chapter 7 bankruptcy case and there is a car that is titled in their name, paid off, and worth –let’s just say- $12,000. The trustee is claiming that he is entitled to take possession of the car, sell it, and distribute the funds to their creditors.
So, how can you get a dismissal of a chapter 7 case? You cannot. Once a chapter 7 case is deemed to be an “asset case” a judge will not allow you to simply say “oops” and allow you to voluntarily dismiss the case. Once you are in it, you are in it!
Having said that, how would a bankruptcy lawyer deal with this dilemma? Well, a good Virginia bankruptcy attorney is of course intimately familiar with Virginia’s bankruptcy exemptions. Maybe it is just a matter of applying the $6,000.00 car exemption and utilizing 34-4 to protect the remaining equity in the car. And if the car is worth a bit more than the available bankruptcy exemptions then perhaps you purchase the car back and pay for the un-exempt portion. Or, if the car has a great deal of equity and is worth a lot then you may have to convert to a 13 and pay off the car over 5 years. Finally, if you are an experienced Virginia bankruptcy attorney you realize that you may be able to convince the trustee/court that the debtor –the person who filed for bankruptcy- has merely “bare legal title.” Meaning, you may be able to make the convincing argument that your client has title to the car in name only. If you can show that all the car payments were made by someone other than the person filing for bankruptcy and that this other person drove the car you may have a winning argument.
Moral of the story is: While you can certainly file for bankruptcy on your own, the question is do you really want to?!
At least once per month I get a phone call that goes something like this: I filed a chapter 13 bankruptcy case with “XYZ attorney” last year and now I need to file a Motion to Incur Debt (for example) since I need to get a new car loan, but the problem is that I just cannot get a hold of anyone at his office. I have left repeated messages and emails, but no one will call me back. So, can you help me?
I then go on to explain that in order for me to help them they would need to fire their current bankruptcy attorney –talk about awkward- and retain me. Mind you, retaining me at this point will not be cheap since right of the bat I will have to file a motion with the court and attend a hearing and get the judge’s permission to enter the case. Suffice to say, the potential client is anything but thrilled upon hearing this. In fact, most feel stuck at this point. You want to “break up” with your current bankruptcy attorney, but are finding it very hard to do so. Ouch!
The fact of the matter is that a chapter 7 bankruptcy filing is over and done with in about 100 days from the time your file. By contrast, a chapter 13 bankruptcy filing typically last anywhere from three years to five years. Moreover, a chapter 7 bankruptcy filing usually does not involve too much work after the creditors hearing takes place, which is about one month after filing. Not so with a chapter 13 bankruptcy. The “real fun” usually begins after the creditors hearing as you try to ensure that your case gets confirmed. And while the confirmation of your chapter 13 Plan pretty much signifies that “the fat lady has sung,” the fact of the matter is that there are all kinds of issues that can and typically do pop up after your case is confirmed. Here are some common illustrations:
- There are issues with the proof of claims. You filed a 100% plan for instance, but lucky for you not all creditors filed timely claims.
- Your car that was part of the bankruptcy filing just got totaled.
- Unfortunately you lost your job and are wondering how that impacts your bankruptcy case.
- You suffered a short term set back and would like to see if you there is any way to suspend your payments to the trustee for a few months.
- Bank has just filed a Motion for Relief from the Automatic Stay because you have not kept up with your mortgage payments since the filing of your case.
- The chapter 13 trustee is demanding your tax refund from last year, but you have already spent it.
- You lost your part time job that you had at the time of the filing of your case and are wondering if your payments to the bankruptcy trustee can be reduced.
- You need a new car loan and realize that you need the court’s permission before you get a new loan.
So what’s the point of all of this? When selecting a bankruptcy lawyer, particularly in the context of a chapter 13 case, understand that he or she is going to be your attorney for many years to come. Understand that issues will come up during the next 3/5 years and that you will need to have access to your bankruptcy lawyer and you will need his help. Understand that while “how much does it cost” is a legitimate concern, the more important thing to ask yourself is “how much will I be getting in return?”
Oh, and in case you are still wondering, most bankruptcy attorneys in this area charge $3,000.00 for a chapter 13 bankruptcy case. For an excellent article on the “how much does it cost” issue revolving bankruptcy filing, please see what Charleston bankruptcy lawyer Russell A. DeMott had to say in his blog article titled Bankruptcy Lawyer’s Fees: “How Much Is it?”