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The Pitfalls of Filing Chapter 7 Without an Attorney

By Lynn M. LoPucki

There are some folks who attempt to file bankruptcy on their own. Most of these folks file for Chapter 7 since that is the simplest kind of bankruptcy. Even those who have chosen the right chapter to file under will need to accurately complete and file bankruptcy forms with the court and the bankruptcy trustee before their bankruptcy can be discharged.  With many bankruptcy petition and related schedules being in excess of 50 pages, this can be a very daunting task for those without any previous bankruptcy experience. Further, there are severe complications that can arise in even the simplest of bankruptcies and a failure to account for important details can cost you dearly. Below, we’ll discuss why you should not file a Chapter 7 bankruptcy on your own.

Filing a Chapter 7 Without an Attorney

The above graphic shows the complicated path that Chapter 7 bankruptcies follow. Even the pre-bankruptcy decision-making process is complicated. In several cases, problems arise even before the bankruptcy has been filed.

Chapter 7 is great for discharging debt and obtaining a fresh financial start.  Bankruptcy can wipe out unsecured debt and other debts.  But bankruptcy can be a complicated process full of pitfalls for the untrained. A lot goes into planning and filing for bankruptcy, including pre-filing bankruptcy planning, completing complicated paperwork, and attending a meeting before a Bankruptcy Trustee.  Even choosing the right chapter of bankruptcy for the untrained may be daunting and problematic.

In certain cases, filing for bankruptcy at all may not be the best option. In other cases, those who file themselves (pro se filers) don’t file under the right chapter.

What are the Pitfalls of Filing Pro Se?

Once you’ve filed for Chapter 7 and your bankruptcy has gone through, you won’t be able to file again for several years. If you’ve filed under Chapter 7, filing for another Chapter 7 won’t be possible for another eight years or four years for a Chapter 13. You need to be certain that you’re making the best possible choice, including all of your debts for discharge, and filing under the correct chapter.

Failing to Exempt or Protect Property

In Chapter 7, you can discharge your debts at the expense of your assets. Certain valuable assets can be liquidated to repay creditors at least some of what you owe them. However, there are both Oregon and federal statutes that allow you to protect certain assets up to a certain amount of value. Additionally, you may be able to protect equity on your home or your primary vehicle as well as any tools used in your line of work (up to a certain value). Failing to protect this property using the correct exemptions may cause you to lose it.

Many pro se bankruptcyfilers also believe that the bankruptcy trustee is an unbiased third party. They aren’t. They represent the interests of creditors and are actually given a commission on any non-exempt property that they can find and liquidate. This ensures that they have every incentive to come after unprotected valuable property.

Failing to Provide the Necessary Paperwork

A bankruptcy filing is heavily form-driven. You are required to complete a large packet and provide this information to the court and the bankruptcy trustee. Many pro se bankruptcy filers neglect to fill out all the necessary forms and this results in their case being dismissed.

Additionally, bankruptcy filers are required to take two credit counseling courses one of which must be completed before you file for bankruptcy and the other of which is completed before you receive your discharge. Failure to receive certificates from these credit counseling courses will result in your bankruptcy case being dismissed.

Adversary Motions

While filling out an information packet is not beyond the capabilities of most people, creditors can challenge the dischargeability of a debt. In this case, pro se bankruptcy filers will need to present an argument as to why the debt is dischargeable. Navigating the Bankruptcy Court system, responding to litigation, can also be extremely daunting for the untrained.

Being Accused of Bankruptcy Fraud

Sadly, some pro se filers don’t include all of their debts and don’t list all of their assets. Then they end up getting accused of fraud by the bankruptcy trustee. Not only do they end up needing a bankruptcy attorney, but now they may also need a criminal defense attorney.

Why You Need a Bankruptcy Attorney

Unless your bankruptcy is abnormally simple, you need to proceed with extreme caution. Firstly, you’re probably under some time constraints. If you’re facing creditor lawsuits and your bankruptcy case is dismissed, then the creditor may be able to get a judgment against you while you’re figuring out why the bankruptcy judge won’t process your bankruptcy.

Secondly, you will need a plan for protecting your assets in Chapter 7. Failure to protect these assets will result in the loss of valuable property and the bankruptcy trustee has every incentive to find and liquidate this property and no incentive to help you.

Lastly, even though Chapter 7 is the simplest form of bankruptcy that you can file, that doesn’t mean that it’s simple. You don’t want to run the risk that your case will be dismissed allowing your creditors to place a lien on your homestead or begin garnishing your wages. You don’t want to be accused of bankruptcy fraud for failing to disclose information that you simply forgot about. And you want to be prepared for any curveball that your creditors throw at you.

Call a Eugene, OR Bankruptcy Attorney Today

There are serious risks involved with filing for bankruptcy. Only an experienced Eugene, OR bankruptcy attorney can navigate these risks, predict what curveballs will be thrown at you, spot potential issues, and ensure that you aren’t accused of bankruptcy fraud. Call Butcher Law Office, LLC today for more information on how we can help.