Pitfalls of Filing for Chapter 7 Bankruptcy Without an Attorney

Here are the most common mistakes people make when filing for bankruptcy without an attorney.

Many people file for Chapter 7 bankruptcy without an attorney. Some represent themselves in bankruptcy because they cannot afford the attorney fees. Others have simple cases, and don’t feel the need to hire an attorney.

While filing a successful Chapter 7 bankruptcy on your own is possible, it’s not wise in every case. To learn more, see Filing for Bankruptcy Without an Attorney. And even if you have a straightforward Chapter 7 case, you still may do better (keep more property and discharge more debts), if you get expert help from a knowledgeable bankruptcy attorney.

But the fact remains, many people have filed, and will continue to file, Chapter 7 bankruptcy without an attorney. If you plan to do this, take the time to learn about the pitfalls that come with self-representation in Chapter 7 cases. By knowing what the most common problems are you can (1) make a more informed decision about going it alone or hiring an attorney, or (2) work hard to avoid those pitfalls if you file on your own.

Numbers of Self-Represented Chapter 7 Bankruptcy Filers

According to a 2011 study by the Central District of California, about 9% of bankruptcy filers nationwide file for bankruptcy without an attorney. The overall number varies by state and jurisdiction, however. For example, in 2011 in the Central District, a whopping 28% of bankruptcy filings were by pro se litigants (the legal term for “filing on your own”).   This number increased from 20% in 2007.

After extensive study, the Central District concluded that despite efforts to provide programs and referrals so that people can get legal representation in bankruptcy, it’s just not possible for everyone to have an attorney.

Pitfalls to Avoid if Filing for Bankruptcy on Your Own

According to the Central District’s study, here are some of the most common problems the court sees in bankruptcy cases where the debtor does not have an attorney:

Prebankruptcy Considerations

In many cases, problems arise even before the consumer files for bankruptcy.

Not needing to file for bankruptcy in the first place. Some people file for bankruptcy because they don’t understand what bankruptcy can and cannot do, and what their alternatives are.  (To start educating yourself, see the articles in Bankruptcy Basics and Bankruptcy: Should I File?)

Filing under the wrong chapter. For most consumers, the logical choices are Chapter 7 bankruptcy and Chapter 13 bankruptcy. There are important differences between the two: not everyone qualifies for either or both, and each treats property and debt differently. For example, if you want to save your home from foreclosure, Chapter 13 might be your best bet. If you have low income and no assets, Chapter 7 may be the way to go. If you file for the wrong chapter, you might lose valuable property, or end up not discharging certain debts

Filling Out and Filing the Petition, Schedules, and Other Documents

Even if the debtor chooses the correct chapter to file under, pitfalls abound in the paperwork phase of bankruptcy.

Failure to file required documents. According to the Central District, many self-represented bankruptcy debtors do not file all of the required bankruptcy documents. You can find information on the forms you’ll need, filing fees, and more in our Filing for Bankruptcy: Getting Started section.

You can find copies of the official bankruptcy forms on the website of the United States Courts at www.uscourts.gov/FormsAndFees/Forms/BankruptcyForms.aspx. From the website, you can print out blank copies of the forms. Or you can fill them in online and print the completed forms.

But many courts also have local rules and forms. If you are filing on your own, it may be worth a visit to your local bankruptcy court or its website to find out what your court requires. To find your local bankruptcy court’s website, go to www.justice.gov/courtlinks for a list of links to local courts. Or try www.uscourts.gov/court_locator.aspx.

Choosing incorrect property exemptions. Property exemptions play a key role in both Chapter 7 and Chapter 13 bankruptcy. (Learn about bankruptcy exemptions and how they work.) You can find the most common state and federal exemptions on the Internet (for example, Nolo has articles on the homestead and motor vehicle exemptions in each of the 50 states). But it’s imperative that you double-check these with current state law – exemptions do change periodically.   If you’re filing on your own, it’s up to you to make sure you have the correct law and statute citation.

If you’re unclear how to list or value a particular item of property, can’t figure out your equity in the property, own property with someone else, or stand to lose valuable property (like your home or car) or property you care about (like a family heirloom), a visit to an attorney may be well worth the money.

Not understanding the difference between credit counseling and financial management. In Chapter 7 and Chapter 13 bankruptcy you must receive credit counseling from an approved provider before you file for bankruptcy, and take a financial management course before you get a discharge. Many pro se debtors are confused about these requirements, and fail to file the proper certificate. Failing to comply with these requirements can result in dismissal of your petition or not getting a discharge.   (To learn more, see Credit Counseling & Debtor Education Requirements in Bankruptcy.)

Motions or Adversary Actions

In some Chapter 7 cases, you file for bankruptcy, attend the meeting of creditors, and then get your discharge. But in others, a creditor may challenge the dischargeability of a debt, the trustee may allege that you have committed fraud, or something else might crop up.   In these situations, you may find yourself on the receiving end of a complaint or motion, or perhaps you want to file a motion (for example, to get student loans discharged). In these types of actions, often an attorney is essential to your success.  

According to the Central District, many self-represented filers:

  • do not understand the significance of motions for adversary actions
  • are not able to adequately defend against an action seeking to deny discharge, and
  • sometimes file illegible or handwritten motions or responses.

How to Get Help With Your Bankruptcy

If you decide to file for bankruptcy on your own, find out what services are available in your district for pro so filers. Some bankruptcy courts hold pro so clinics where an attorney describes the bankruptcy options and process. Others can connect you with legal aid organizations that do the same. Many courts and their websites have information for consumers filing for bankruptcy – from brochures describing low-cost or free services to detailed information about bankruptcy.

Getting a good self-help book is also an excellent idea. Any bankruptcy book worth its salt will highlight situations when you should talk to an attorney – take that advice to heart.

You also might be able to find an attorney who will provide advice without full representation. And most bankruptcy attorneys will meet with you for free for an initial consultation. That might be enough for you to learn that bankruptcy is not for you, to determine which chapter is best for you, or to discover that you have some issues that might mean going it alone is a bad idea.

(To learn more about hiring an attorney, getting other types of bankruptcy help, or what to do if you can't afford a Chapter 7 attorney, visit out Getting Bankruptcy Help section.)

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