Do You Need an Attorney to File Chapter 7?

By Chris Blank

If you are facing a mountain of debt, you may conclude that you'll never be able to repay everything you owe. Filing a petition for Chapter 7 bankruptcy might be the only way out, but the cost of an attorney could be holding you back. It is possible to file Chapter 7 bankruptcy without an attorney, although attempting to do it on your own is unwise. Fortunately, help is available and it may be more affordable than you think.

Chapter 7 Bankruptcy Requirements

You are legally allowed to file a Chapter 7 bankruptcy petition on your own, but a bankruptcy court will usually discourage you from doing so unless you have legal training. The documents for a Chapter 7 petition are lengthy and complicated, and the clerks at the bankruptcy court are not allowed to give any help. Completing the petition for Chapter 7 bankruptcy is only one of many steps in the complicated process of obtaining a discharge for your debts, which usually requires at least several months to complete. Each step in the process requires following legal procedures that must be strictly observed.

Chapter 7 Procedure

Your petition must include an inventory of your assets as well as a listing of your creditors, contact information and the amounts you owe each creditor. You must also submit to a means test to determine whether you qualify for Chapter 7 or must file Chapter 13 instead. Within 180 days before filing your petition, you must undergo credit counseling and submit a certificate to the bankruptcy court. You will be assigned a trustee, who will schedule a meeting between you and your creditors. At this meeting, you must answer questions under oath about your finances. The trustee determines whether you have assets that can be liquidated to pay your creditors. You must complete personal financial management instruction within 45 days after the meeting with your trustee and file the required paperwork with the court.

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Possible Pitfalls

Making a mistake could cause your bankruptcy petition to be delayed. In extreme cases, the court might even dismiss your petition. For instance, if you fail to complete credit counseling or personal financial management instruction within the deadlines set by the court, your petition may be dismissed. In some states, debts that are not properly listed in your petition will not be discharged. Filing a petition with missing pages or omitted sections could delay your discharge, or the court could throw your case out entirely.

Alternatives to Attorneys

Hiring an attorney to assist you with filing a Chapter 7 bankruptcy petition isn't cheap. As of 2012, you may expect to pay more than $1,200 for an attorney to help you prepare the necessary documentation, in addition to court costs. However, if your income is very limited, you may qualify for free or low-cost assistance from a legal clinic in your area. Another option is to use an online document preparation service. Although a document preparation service can't represent you in court, you may be able to consult with a specialist or an attorney as you prepare your petition.

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What If I Am Unable to Pay for a Bankruptcy Lawyer?

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A bankruptcy discharge is available to you at the completion of your bankruptcy case. Your debt is erased when you receive the bankruptcy discharge, and the debt is no longer enforceable. However, when you receive a bankruptcy discharge will depend on whether you file for Chapter 7 or Chapter 13 bankruptcy, the two most common forms of personal bankruptcy.

What Happens When Chapter 13 Is Dismissed?

Chapter 13 bankruptcy allows you to create a three- to five-year repayment plan to catch up on your debts. If your case is dismissed, either by you or the bankruptcy court, prior to completion of the repayment plan, you will not receive a bankruptcy discharge, which erases the debts covered by your bankruptcy case and makes them unenforceable by your creditors.

Advantages & Disadvantages to Declaring Bankruptcy

Bankruptcy is a court process available by federal and state laws to help both individuals and businesses shed unsustainable debt and get back on their feet financially. It offers a second chance at a clean financial slate, but it also has disadvantages. Bankruptcy may not be your only option to resolve your debts, but its advantages may outweigh the disadvantages in your particular situation. You may wish to consult an attorney before deciding whether bankruptcy is the best option for you.

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