Do You Need a Lawyer to File for Bankruptcy?

Audrey M. Jones
Worried Woman

Federal courts handle bankruptcy proceedings. Bankruptcy laws and the rules of federal courts can make bankruptcy cases difficult to navigate. However, you are not required to hire a lawyer to file for bankruptcy or proceed with a bankruptcy case.

Do-It-Yourself vs. Hiring an Attorney

Individuals filing for bankruptcy are not required to hire an attorney. This is not true for corporations and partnerships, which are required by federal law to have an attorney represent them in bankruptcy proceedings. An individual handling a bankruptcy case without an attorney is considered to be acting "pro se", meaning "advocating on their own behalf."

Benefits of Pro Se Representation

Representing oneself during a bankruptcy proceeding has a few benefits, for example:

  • No need to pay an attorney: Acting pro se eliminates the need to pay an attorney, which can be costly.
  • Easier identification of property involved: An individual is the most familiar with their property. A pro se individual does not have to relay information to an attorney to have it included in the bankruptcy proceeding.

Drawbacks of Pro Se Representation

Bankruptcy court employees, such as the court clerk, are not allowed to assist pro se individuals filing for bankruptcy. Therefore, learning about laws and abiding by regulations is entirely up to the individual. There are several additional drawbacks to an individual representing themselves in a bankruptcy case, including:

  • Increased risk of failing to comply with laws and rules: The failure to abide by a court rule or federal law, such as those found in the United States Bankruptcy Code and Federal Rules of Bankruptcy Procedure, may result in the bankruptcy filing being rejected. This could result in the individual not receiving an automatic stay on their debts or in their case being rejected and being prohibited from re-filing.
  • Potential loss of property: Bankruptcy laws regarding property are extremely complex. Not asking that property be protected may result in the court's ordering the property to be sold to discharge debts.
  • The failure to discharge all debts: An individual's failure to include a debt in their filing may result in the debt not being discharged by the court.
  • Potential of facing criminal charges: Fraudulent behavior in bankruptcy proceedings is a crime. Failing to properly present all property involved in the bankruptcy may result in the individual facing criminal charges.
  • The need for out-of-pocket payment of fees: An attorney usually handles the cost of filing the case, such as filing and mailing fees, out of their own pockets and then requests reimbursement. Pro se litigants must pay these fees with the filing of their petition.

Benefits of Hiring an Attorney

An individual filing for bankruptcy may hire an attorney to represent them. The benefits to hiring an attorney to represent you in bankruptcy court include:

  • An increased likelihood that the case is filed for and handled according to laws and court rules: this makes it less likely that the case will be dismissed on a technicality.
  • Increased likelihood of retaining some property: a lawyer can work to have some of the individual's property remain in the individual's name, resulting in their not losing all their belongings.
  • Increased chances of the case being resolved faster: an attorney's knowledge of federal bankruptcy laws and rules usually means that filings aren't returned for more information or rejected based on technicalities. This may mean that a bankruptcy case is resolved quicker.

Drawbacks to Hiring an Attorney

Of course, there are also drawbacks to hiring an attorney, the most notable of which is the need to pay the professional for their time. In a bankruptcy, when money is already tight, paying an attorney might be too much for an individual's bank account to handle.

Another drawback to hiring an attorney is the need for an individual to share that attorney's time. Attorneys almost never handle only one case at a time, requiring all their clients to understand that their case is not the lawyer's sole focus.

Average Cost of an attorney

The cost of an attorney depends on the type of bankruptcy: Chapter 7 or Chapter 13. According to AllLaw.com, for a Chapter 7 bankruptcy attorneys charge between $500 and $3,500 per case. For a Chapter 13, typical fees range between $2,500 and $6,000.

This amount varies depending on the jurisdiction in which the case is filed, the case's complexity, and what attorneys in the area typically charge for the type of case. Some attorneys charge a flat rate for their services while others charge an hourly fee. A flat rate remains the same no matter how much or how little work an attorney does on a client's behalf, while hourly rates increase with the complexity of the case.

Average Cost of Pro Se Filing

Pro se individuals must pay all filing fees themselves every time they submit a document to the court. As of November 21, 2012, the US Court System charges $306 for filing a Chapter 7 petition and $281 for filing a Chapter 13 petition. Usually, other fees are charged as the case progresses.

Online Help

Websites and other resources usually do not offer bankruptcy petitions. In fact, almost all websites, such as Legal Zoom, refer individuals wanting to file for bankruptcy to an attorney. This is because bankruptcy paperwork is available from the court system for free, thereby allowing pro se individuals to complete and file the paperwork at no cost other than filing fees.

How to Hire an Attorney

Technically, any licensed attorney may handle a bankruptcy case. However, some attorneys specialize in bankruptcy law. You may hire either to represent you in bankruptcy court, but a bankruptcy attorney may have advanced knowledge of bankruptcy court rules and federal bankruptcy laws.

Pro Bono

Free legal assistance either in the form of an attorney representing the individual at no cost or the individual receiving legal guidance for their case is available to individuals who are unable to hire an attorney. This legal assistance may come from a local legal aid society or an attorney willing to act "pro bono", meaning without payment. Law schools, state bar associations, and state legal services agencies can help you locate an attorney willing to work for free on your behalf.

Selecting an Attorney

Always interview several attorneys before hiring one to handle your bankruptcy case. When interviewing attorneys, inquire into:

  • The number of bankruptcy cases he or she has handled previously: The more experienced the attorney, the greater likelihood your case will proceed smoothly and quickly and that you will retain some property.
  • How many individual versus business bankruptcies the attorney has handled: An individual should ensure that the attorney has experience with individual bankruptcy proceedings, since they differ drastically from corporate or business proceedings.
  • The fees the attorney usually charges for bankruptcy cases and how they are charged: Ensure that you understand the maximum amount you may have to pay and how that amount is calculated, as well as when it will become due, prior to agreeing to work with an attorney.
  • What services will be included: Inquire into the exact services the attorney files so that you are certain of what you are paying for. For example, does the attorney investigate all of your property or are you required to provide him or her a list and documentation of it? Does the attorney pay for any experts, such as accountants, that are required to review your assets?
  • How long the attorney expects the case to last: This helps gauge how much time the attorney expects to spend on your case, how complex they view your case to be, and how long you can expect to wait before your case is resolved.
  • Whether any other attorneys will be working on the case: A large firm may have several attorneys working on your case. This may make your case proceed faster, but might also mean that you are working with several different lawyers.
  • The attorney's certifications: Several states offer attorneys the ability to earn certifications in bankruptcy law. These certifications indicate advanced knowledge of the field of law, which may make them able to better handle your case.

Where to Go for Help

If you're considering acting pro se in a bankruptcy case, visit the website of the federal court in which you must file your petition. Often, these websites provide general information about what forms must be filed, and some may even provide forms that can be printed and completed before filing.

Do You Need a Lawyer to File for Bankruptcy?