I always find it odd when I am conducting a bankruptcy consultation and a prospective client asks me, “do I even need a lawyer for this?” I am always candid with my response – “No. You can do this all on your own.” The prospective client will often look at me quizzically, as if I had just shared with them some industry secret that will save them thousands of dollars. The harsh reality of the situation usually hits them when I also point out that you can also build your own house from the ground up by watching Youtube videos. You can fly a helicopter by reading a book. Also, you can perform dentistry on yourself with a decent “how to” manual and a hand mirror. The question really should not be “can” you do these things. Obviously, we should be asking if you “should” undertake these activities. What can go wrong if you try to whip up your own bankruptcy petition and represent yourself throughout the case?
The biggest and most glaring risks of “pro se” filings (representing yourself) involve inadvertently losing your property or belongings because you did not know that once you filed your bankruptcy, the bankruptcy trustee would be able to take your stuff. Were you aware that certain real estate is “protected” from the clutches of the trustee, but yet other real estate is not? You may think that because you live in Florida, your primary residence is protected due to Florida’s “homestead protection.” Well what if your home is within a municipality (city limits) and is greater than ½ acre of land? Guess what, part of your homestead might not be protected. (1). Do you know how your local bankruptcy trustees will value your personal belongings? Will you be able to keep that gun collection? What about your tools? What about your inherited family jewelry? Do you want to gamble with grandma’s ring?
Can you keep your car if you file for bankruptcy? Are you sure? What if there is no lien on the vehicle? Is the equity in your vehicle protected? How much of it? What system do my local bankruptcy trustees use to value a vehicle? Can a bankruptcy be used to lower the amount I owe on my car from the loan amount to the amount my car is worth? In some situations, it is actually possible to do that! (2).
Is your retirement protected? What about that IRA you are hoping to live on after you are done working? Many people think that retirement plans such as 401(k)’s and IRA’s are automatically protected in a bankruptcy. Well, certain retirement accounts are protected and certain ones are not. On June 12, 2014, the U.S. Supreme Court ruled that inherited retirement accounts were not protected from an individual’s creditors under bankruptcy law. (3). Are you willing to risk losing your retirement because you might not have a firm grasp on what the bankruptcy court deems “protected”?
The great news is that hiring an attorney is not all that expensive in the grand scheme of things. I know what you are thinking. “Of course the LAWYER thinks his fees are reasonable!” I get that, but hear me out. The court scrutinizes our fees. We, as lawyers, have to reveal to the court how much we charge, and if the court feels we’ve charged more than a customary fee, we actually have to go to court to justify why we charged what we charged. Judges like us all to charge around the same amount. So while prices may differ a bit between lawyers, our prices are usually all in the same ballpark. That is great news for you! That means that rather than spending your time price shopping you can actually spend your time interviewing local attorneys and finding one that you believe can best help you with your needs.
When all is said and done, the benefits of having an attorney represent you can GREATLY exceed the amount you paid the attorney. We can save you tens of thousands of dollars by eliminating certain IRS obligations, eliminating 2nd mortgages, reducing the amount you owe on your motor vehicle, helping you get your home loan modified, and that is just to name a few. Also, consulting with a lawyer can often save you a great deal of money by helping your realize that maybe you do not need to file for bankruptcy in the first place!
If you have questions about how the bankruptcy laws might impact your particular set of circumstances, you owe it to yourself and your family to consult with a professional that can help guide you. I am in my 15th year of practicing bankruptcy law and I have helped countless people with situations probably a lot like yours. Perhaps the best news of all is that the first step does not cost you a penny. My consultations are always free, either in person or over the phone.
(1) X §4 of the Florida Constitution
(2) Section 1325(a)(5)(B) of the Bankruptcy Code
(3) 134 S.Ct 2242, 2245 (2014)