Common Errors Made By People Who File for Bankruptcy Without a Lawyer

Bankruptcy is a complex legal proceeding that requires an intimate understanding of bankruptcy law, court procedure, and finances. As with other legal proceedings, parties are legally permitted to file and proceed on their own behalf, without counsel. Like other court proceedings, however, doing so is strongly discouraged. People who file for bankruptcy without the assistance of counsel are much more likely to make mistakes that can be damaging to their case, harmful to their finances, and possibly fatal to the bankruptcy proceeding overall. Read on to learn about a few of the more common errors made by people pursuing bankruptcy cases on their own behalf. If you are considering bankruptcy or other debt relief measures, talk to an experienced Ventura debt relief and bankruptcy attorney for advice and assistance.

Choosing the Wrong Type of Bankruptcy

There is more than one type of bankruptcy, and the best type of bankruptcy depends upon your specific circumstances. Chapter 7 bankruptcy is meant for low-income or no-income debtors and may result in a sale of the debtor’s assets to pay down as much of the debt as possible. Chapter 13 is meant for debtors with income and the ability to pay back their debt over time, allowing the debtor to avoid selling assets but prolonging the debt rather than discharging immediately. Chapter 11 bankruptcy is best for businesses but may make sense for individuals under certain circumstances. A bankruptcy lawyer can help you explore your options and ensure you pick the chapter that best fits your needs.

Failing to Qualify for the Right Type of Bankruptcy

Once you have chosen your preferred bankruptcy type, you still need to qualify. Chapter 7 bankruptcy is reserved for individuals whose income is below a certain threshold. Even if their household income exceeds the threshold, they may be able to qualify by satisfying the “means test.” Debtors who do not qualify for Chapter 7 may instead file for Chapter 11 or 13, depending on their circumstances. Make sure you not only know which bankruptcy is optimal for you, but that you also know how to prove that you qualify for your preferred bankruptcy.

Transferring Property Before Bankruptcy

Many people think they can protect assets by giving away property before filing for bankruptcy, e.g., gift the assets to a friend or family member, file for bankruptcy, then get those assets back afterward. Bankruptcy law, however, accounts for this tactic: Any transfers of property made within two years of filing for bankruptcy for less than the actual worth of the property will be considered a fraudulent transfer and will be set aside. If a debtor fails to disclose any such transfers during the meeting of creditors or otherwise when asked during the proceeding, the debtor can face charges of perjury and other serious penalties.

Failing to Protect Property in Chapter 7 Bankruptcy

If you file for Chapter 7 bankruptcy, the trustee might seek to collect certain assets for sale in order to pay off as much of your covered debt as possible before discharging the remainder. There are many exceptions and exemptions, however, that debtors can use to protect their property from sale. In fact, most debtors with attorney representation are able to protect most, if not all of their assets from sale. If you file on your own, you could miss out on various provisions of the bankruptcy law that you can use to protect your car, your house, personal items, and other property from the bankruptcy proceedings.

Find Your Financial Independence With the Help of a Seasoned Southern California Debt Relief Attorney

If you are dealing with mounting debt and considering bankruptcy or other debt relief options, please contact Rounds & Sutter for a free, confidential consultation. With offices in Ventura and Westlake Village, we represent clients throughout Southern California, offering trusted, effective legal counsel in the face of life’s challenges.