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Can I file for bankruptcy without a lawyer?

A gavel with a bankruptcy file

For the typical consumer or business that is thinking about filing for bankruptcy protection, money is usually tight and funds are limited.  This may cause you to think that you cannot afford to hire a lawyer to help you with your bankruptcy. After all, it’s just a matter of filling out some forms, right? Actually, a bankruptcy proceeding is more involved than that and the forms you have to complete are quite complicated to the average consumer. Errors made in the bankruptcy process can cause your petition to be dismissed or cause the loss of some of your property if not properly exempted under the law. Using an attorney will help ensure that your bankruptcy petition is successful and achieves the best possible outcome for you.

Not only do you need to follow the complicated rules of procedure in federal bankruptcy court in order to successfully file a petition for bankruptcy, it is even more important that you understand which of your assets are included or excluded in your bankruptcy estate.  Failure to understand what makes up your bankruptcy estate can negatively impact your ability to retain your property.  An attorney can advise you on these matters and also help make sure assets are appropriately valued. More important, a competent bankruptcy attorney can assist you with pre-bankruptcy strategies to ensure you obtain the best results in your case.  Finally, an attorney will take the necessary time to complete all your bankruptcy schedules, statements, and petition paperwork (approximately 70 pages), prepare you and inform you of what to expect in your bankruptcy case, and represent you throughout the process, including arguing on your behalf if any creditors object to the discharge of a debt.

What about a bankruptcy petition preparer?

You may have seen ads for individuals or companies offering to prepare your bankruptcy petition for less money than an attorney would charge. Be aware, however, that these companies cannot offer any legal advice and are extremely limited in the services they are allowed to provide. They cannot, for instance, advise you on whether it would be better for you to file Chapter 7 or Chapter 13, a decision which could have serious consequences on your assets, finances and life post-bankruptcy. Many bankruptcy courts caution people to avoid such companies and strongly recommend hiring a competent attorney. And of course, these companies may charge substantial fees that do not end up saving you money and end up costing some of your property (even your house!).

If you are concerned about how much money a bankruptcy attorney will cost you, note that bankruptcy judges have the authority to review an attorney’s fees in every case and demand that any unreasonably high or unjustified fee be refunded.  All bankruptcy fees must be disclosed by the attorney in the bankruptcy petition.  The Central District of California even has a “Rights and Responsibilities” form that details the services to be performed by the attorney in a Chapter 13 bankruptcy and the amount that attorney will charge for those services.

Judge Gregory F. Kishel, then-Chief United States Bankruptcy Judge for the District of Minnesota, had this to say in a recent case involving a non-attorney bankruptcy petition preparer:

“[F]iling for bankruptcy is serious business, even for a consumer-debtor with modest assets and a debt structure that seems straightforward.” The judge goes on to describe how bankruptcy cases have become more complex and precarious for the filer since amendments to the bankruptcy law in 2005. The judge concludes that dealing with bankruptcy requirements are “best, most safely, and most predictably handled through representation by a licensed attorney.” Attorneys, he says, are the only ones “presumptively competent to protect a debtor’s interests under the onus of such complications [speaking of the nation’s complicated bankruptcy laws].” Judge Kishel goes on to note that attorneys are held to professional standards of competence and conduct and are a key aspect of seeing that bankruptcy cases are “done right, for consumer-debtors in bankruptcy, from the beginning.”

Bankruptcy is a complicated legal area, and there is simply no substitute for the advice and assistance you can get from an experienced and successful bankruptcy attorney. If you are considering filing for bankruptcy protection in Southern California, call the Law Offices of Rounds & Sutter LLP at 805-650-7100 for a free consultation.