The Perils of “Do-It-Yourself” (DIY) BankruptcyMay 25, 2018
Continuing the theme of the perils of “Do-It-Yourself” legal documents, my subject for today is the risks associated with a “Do-It-Yourself” bankruptcy filing.
While many bankruptcy filers have financial issues and regard legal fees as an obstacle to bankruptcy, this does not have to be the case.
Most Chapter 13 practitioners will accept their legal fees over the life of the Chapter 13 Plan. This allows for a fair compensation to the attorney, while the client receives competent legal representation during the case.
Regrettably, many people get bad advice from family and friends that bankruptcy is a simple matter that can be done on their own. The Bankruptcy Court provides the forms online for interested people. However, filling out the forms is a fairly confusing task, and the forms have many questions that a layman may not be able to answer.
Moreover, one of the important aspects of a bankruptcy filing is making sure that the bankruptcy filer takes advantage of all legal exemptions. This permits most bankruptcy filers to keep the real and personal property that they own at the time of the bankruptcy filing. This is truly a trap for the unwary because if bankruptcy exemptions are not used properly, then creditors may object to the exemptions and the debtor may lose property needlessly.
Additionally, the bankruptcy filing also requires computations that are accurate with regard to income and expenses and documentation to substantiate the figures. Pay stubs must be filed with the Court. Failure to do so may result in a dismissal of a case that was filed by a “pro se” debtor. “Pro se” in this case means “representing one’s self.” There are other pitfalls similar to this that may give the appearance of a complete filing, when in fact the bankruptcy has not been properly filed, which may result in an involuntary dismissal.
Additionally, the credit counseling requirement can be overlooked by the “do-it-yourself” filer, which would not happen with the careful advice of a legal practitioner.
Given that bankruptcies are often brought on by foreclosures and resulting Sheriff Sales, timing can be a very important issue. You file too late and you lose your house!
Additionally, any creditor collection activity, including garnishments, may also have a time factor that can be used to minimize the loss of money or property with a properly timed bankruptcy filing.
For all these reasons, it is always advisable to consult an attorney before filing a bankruptcy. Most bankruptcy practitioners provide a free consultation to determine if bankruptcy is one of your options.
For this reason, we welcome your call to discuss your bankruptcy options with a free consultation at Daley Zucker Meilton & Miner, LLC, at (717) 724-9821.