Filing for Bankruptcy: Do I Need to Hire a Lawyer?

If you are having trouble paying your debts as they become due, you may be considering filing for bankruptcy. If so, one of the questions you may be asking yourself is whether you need to consult and hire a bankruptcy attorney, or whether you can go it alone. It is true that the law allows individual debtors to file and proceed in bankruptcy pro se, without legal representation. Before you decide to go this route, however, consider that treating your individual bankruptcy case as a DIY project may not be your best choice.

Uscourts.gov is a website that is maintained by the Administrative Office of the U.S. Courts in order to provide information from and about the federal judiciary, which includes the bankruptcy courts. According to this website, there are many aspects of a bankruptcy case that lawyers can help with, from advising you on whether to file for bankruptcy in the first place to helping you to complete and file the necessary forms. The website also notes that by failing to properly prepare your bankruptcy case, or failing to carefully and properly consider or understand the legal issues involved, you risk obtaining adverse results.

There are many factors to consider and specific questions you need to answer in order to file a successful bankruptcy case. Here are just a few of the decisions a bankruptcy lawyer can help you make:

Which Type of Bankruptcy is Right for Me? Chapter 7 or Chapter 13?

Most individual bankruptcy cases are filed under Chapter 7 or Chapter 13 of the Bankruptcy Code. Chapter 7 cases are known as liquidation cases, while Chapter 13 cases are known as reorganization cases. Both types of cases ultimately lead to a discharge, or relief from paying your debts. However, Chapter 13 cases involve developing a payment plan, which can take years to complete. One sure reason to consult a bankruptcy lawyer is to determine which type of case is right for you.

Am I Eligible to File for Chapter 7 or Chapter 13?

At the outset, you should be aware that not every debtor is allowed to file a chapter 7 liquidation case.

Generally, you must pass a “means test” before you will be allowed to file for Chapter 7 bankruptcy relief. Essentially, this means test compares your income (per family) with the median income of a Texas family of the same size as yours. There are also debt thresholds you must satisfy in order to file a Chapter 13 case. To file a Chapter 13 reorganization case, you must have less than a certain amount of debt, unsecured and/or secured.

How do I File My Bankruptcy Case?

Bankruptcy cases are filed in federal courts. If you decide to proceed pro se, you will need to understand and follow the rules that apply generally in federal courts, as well as the specific local rules that apply to the Texas bankruptcy court in which your case is filed. Also, you will need to understand the basic bankruptcy laws and rules that will be applied in your case – the United States Bankruptcy Code and the Federal Rules of Bankruptcy Procedure – and which apply in all bankruptcy cases. There are also state laws that may apply, such as the Texas exemption law, which can determine which property you claim as exempt in your bankruptcy case.

In addition to these questions, there are many more that a qualified bankruptcy lawyer will ask to help you decide whether and what type of bankruptcy filing is right for you. If you would like to know more, or to discuss your potential bankruptcy case, contact The Law Offices of Douglas J. Powell, P.C. at (512) 476-2457.