Bankruptcy / Do You Need A Bankruptcy Attorney

Do You Need A Bankruptcy Attorney? Understand the Pros and Cons

Written by Ben Tejes
Updated Dec 1st, 2021

Many people do not consider filing bankruptcy to get out of debt because they worry about the cost of hiring a bankruptcy attorney. However, they don’t realize that hiring a bankruptcy attorney is often much less expensive than trying to handle their debt problem alone.

Furthermore, there are some instances where a person might not need a bankruptcy attorney to file for bankruptcy relief. Although, having a bankruptcy lawyer handle your Chapter 7 or Chapter 13 case definitely has benefits that you cannot get from representing yourself.

At Ascend, our goal is to help people get out of debt as quickly and efficiently as possible. In some cases, a person may benefit from using our Savvy Debt Payoff Planner to get rid of debts without filing bankruptcy. In other cases, a person may benefit from filing bankruptcy. If so, we can refer them to a bankruptcy lawyer near them and even help them estimate the cost of hiring a bankruptcy attorney.

To help you understand why you might want to hire a bankruptcy lawyer for your bankruptcy case, let’s review some of the pros and cons of hiring a bankruptcy attorney.

Pros of Hiring a Bankruptcy Lawyer

Bankruptcy law is a complicated legal field. Typically, attorneys who do not practice bankruptcy law will not try to answer questions about bankruptcy cases. Therefore, the best benefit of hiring a bankruptcy attorney is having someone on your side who understands bankruptcy law and how to use that law to help you get out of debt.

Other benefits hiring a bankruptcy lawyer include:

Explain Your Bankruptcy Options

Most individuals file under Chapter 7 or Chapter 13 of the Bankruptcy Code. Chapter 7 bankruptcy is a liquidation or “straight” bankruptcy, while Chapter 13 bankruptcy is a court-supervised repayment plan. A bankruptcy lawyer reviews your financial situation, explains your bankruptcy options, and discusses whether filing bankruptcy is right for you.

Ensure You Are Eligible to File Bankruptcy

Chapter 7 bankruptcy is designed for individuals who cannot afford to repay their unsecured debts. Therefore, you must meet income requirements to receive a bankruptcy discharge in Chapter 7. If you file under Chapter 13, you must have sufficient income to fund the Chapter 13 repayment plan.

A bankruptcy lawyer carefully reviews your situation to determine if you are eligible to file under each chapter of bankruptcy. Furthermore, your attorney reviews your recent financial situation to determine if there could be any potential problems. In some cases, it might be better to file under Chapter 13 to avoid issues with recent credit card purchases or property transfers.

Prepare Bankruptcy Forms

Filing for bankruptcy relief requires completing the federal bankruptcy forms. Federal bankruptcy forms include, but are not limited to:

  • Bankruptcy petition
  • Schedules A & B (detailed list of assets)
  • Schedule C (bankruptcy exemptions)
  • Schedule D – F (creditor information)
  • Schedule G (contracts and leases)
  • Schedule H (list of codebtors)
  • Schedule I (detailed income information)
  • Schedule J (detailed list of household expenses)
  • Declaration of Schedules (sworn statement verifying the information contained in the schedules)
  • Statement of Financial Affairs (roughly two dozen detailed questions about your financial history)
  • Means Test (income test and calculation of disposable income)
  • Verification of Social Security Number
  • Statement of Intentions (Chapter 7 – a statement about how you intend to treat secured debts)

There could be other forms depending on your case. Completing bankruptcy forms accurately and completely is essential. You sign stating that all information is complete and is accurate. Your signature is made under oath with penalty of perjury. 

Having a bankruptcy attorney complete the forms decreases the chance of making a costly mistake.

Help Protect Your Property 

Individuals are entitled to claim certain property exempt from your bankruptcy estate. That means that the equity in the property is not used to repay your unsecured creditors. Bankruptcy exemptions vary by state.

It is crucial you choose the correct bankruptcy exemptions. If not, your property is not protected from the Chapter 7 trustee or your creditors. A bankruptcy attorney advises you whether any of your property could be in jeopardy and how to protect your property. 

Deal With Your Creditors

Most bankruptcy attorneys tell clients to have creditors call the attorney’s office after the person hires the attorney to file a bankruptcy case. Therefore, you do not have to deal with creditor harassment or the stress of creditor calls once you hire a bankruptcy lawyer. 

Represent You In Court 

If you choose to file a bankruptcy case without a lawyer, the court holds you to the same requirements as an attorney. In other words, you are responsible for understanding bankruptcy laws and procedures. In addition, you are expected to understand court procedures, monitor deadlines, and file all required documents to complete your bankruptcy case. 

Saves Time 

Preparing bankruptcy forms can be time-consuming. Bankruptcy lawyers have software that assists in preparing bankruptcy forms. They are familiar with bankruptcy forms, so they can prepare the forms much quicker than you could prepare the forms for filing with the bankruptcy court. You can focus your time on your family and working to recover from a financial crisis.

Hiring a Bankruptcy Lawyer Increases Rate of Success 

As discussed above, the most common “con” of hiring a bankruptcy lawyer is paying bankruptcy attorneys’ fees. However, some attorneys accept installment payments. If you file a Chapter 13, you might be able to pay your attorneys’ fees through your bankruptcy plan. 

Having an experienced bankruptcy lawyer to guide you through the bankruptcy process and provide legal advice increases your chance of success. The goal is to eliminate debt while protecting income and assets. The best person to help you accomplish that goal is a bankruptcy lawyer. 

Filing bankruptcy without a lawyer could result in:

  • Losing property 
  • Paying debts you could have eliminated
  • Having your bankruptcy case dismissed
  • Not being able to file for bankruptcy again for a specific period
  • Facing bankruptcy fraud charges

Cons of Hiring a Bankruptcy Lawyer

One of the main concerns most people have is whether they can afford the cost of hiring a Chapter 13 bankruptcy. For example, the Chapter 7 bankruptcy attorney fee can be over $1000, and some bankruptcy attorneys require the entire payment upfront without offering a payment plan. 

That said, many bankruptcy attorneys do offer payment plans where you may pay as little as $100 per month until the attorney fee is paid so that you can get the relief that you need. Some bankruptcy lawyers also offer a $0 down bankruptcy, which may be more expensive in the long run, but may offer more immediate relief.

Finding a Bankruptcy Attorney Near You

Bankruptcy attorneys generally provide free consultations. Therefore, it does not cost you anything to meet with a bankruptcy lawyer to learn about bankruptcy. If you would like a reputable, affordable bankruptcy attorney in your area, fill in your zip code below to compare bankruptcy attorney options near you.

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