Families or business owners who are considering filing for bankruptcy may wonder if it is a good idea to file on their own without an attorney. While it is certainly possible to file without the assistance of an attorney, in most cases, it is not a good idea. Bankruptcy laws are extremely confusing and one simple mistake can be costly, far more costly than hiring an attorney.
Meeting bankruptcy rules
Since 2005, the rules for filing bankruptcy have changed. While there are some rules that have been beneficial to consumers, some may not feel these rules are fair. In order to qualify for Chapter 7, wiping out all of your debts, you must pass a means test. If a consumer fails the means test, then Chapter 13, a reorganization of debt, must be filed.
Not all debts are eligible
Unfortunately, many consumers assume that nearly any type of debt they owe will be eradicated by filing bankruptcy. This is simply not the case as there are several classifications of debt that will not be eradicated. Some of these include:
- Student loan payments – student loans that are backed by the government are not eligible to be discharged in bankruptcy
- Alimony/child support – neither of these debts are eligible for discharge
- Taxes – only taxes that are older than three years old (and have been filed) are eligible for discharge
- Judgments – any judgment that exists from debtors or due to a personal injury claim typically cannot be discharged
Consumers who have significant debt that falls under these categories may not benefit from filing Chapter 7 bankruptcy but may still get some benefit from filing a Chapter 13 bankruptcy. However, in order to make this determination, you will probably need the help of an attorney who is well-versed in bankruptcy law.
Mistakes that can be costly
One of the dangers of filing for bankruptcy is overlooking certain debts. In the event you file and overlook any debts, those creditors are not bound by the terms of your bankruptcy. Even when your bankruptcy is approved and discharged, those debts would still need to be paid in full.
While filing bankruptcy is relatively simple, there are several steps that are involved in the filing. In addition to passing a means test, you must also take a credit counseling course at the start of the filing and you must take an additional course before your bankruptcy is discharged. Making a decision to file bankruptcy is never an easy one. However, filing on your own without the assistance of competent legal help could be a very costly mistake.