The path to financial freedom can often be stormy and rough. Despite this, many people consider navigating that path completely on their own. We recently learned at a bankruptcy meeting that Arizona is one of the top states for pro se filings (pro se being a legal term for representing oneself). To put that into prospective, there have been 32,954 bankruptcy cases filed year to date in Arizona. Out of those 32,000+ cases, 21.8% have been filed by Debtors representing themselves. That’s a pretty significant number of people pursuing bankruptcy without legal assistance. I have even been to a 341 Meeting of Creditors docket where only 2 out 6 cases were filed with an attorney.
Why do so many people file bankruptcy pro se and do I think it is a good idea? Well, I would suppose the most common answer to part A of that question is that using an attorney costs money, and people who are declaring bankruptcy do not have money. I know it is a common response that I get when I tell a prospective client that they will need to agree to pay me $2,000.00, or so, to file his/her bankruptcy. I can’t blame people for balking at this. I honestly do get it.
Which brings me to part B of the question, do I think it is a good idea to file bankruptcy without a lawyer? I would say that for 99% of the cases, the answer is “no.” While I understand that it is difficult to pay attorneys fees when you are facing financial hardship, please remember that bankruptcy attorneys are regulated by the courts on the amount of fees that we can charge. If a bankruptcy trustee or judge feels that too high a fee has been charged, he/she can either request a detailed fee application to justify that charge or disgorge an attorney of some of the fees. So, we are regulated, and we are charging reasonable fees. Also, almost every bankruptcy attorney I know will allow clients to make installment payments on the fees. While you do have to pay in full before the case can be filed, you can take whatever time you need to get there.
Ok, why else should you consider hiring a bankruptcy attorney? Because the bankruptcy waters are crazy, and the laws can be complicated. In 2005, the bankruptcy laws were changed under the Bankruptcy Abuse Prevention and Consumer Protection Act (B.A.P.C.P.A.). This little law confused even the most seasoned bankruptcy attorneys. So how can someone with little to no legal experience be expected to understand the new bankruptcy laws? In my opinion, it would be almost impossible. Yes, sometimes there is a Chapter 7 case that comes through my door, and I think that I should not suggest that the person pay me to file his/her bankruptcy. Some cases are just that simple. But most cases just aren’t. And some cases that appear to be so simple at the initial consultation reveal themselves to be monsters. These are the times where someone with complete knowledge of the law is necessary. Additionally, I would never (and I mean NEVER) advise a potential Chapter 13 client to file without an attorney. There are too many intricacies in a Chapter 13, and you will get lost on your own.
Finally, regardless of the complexity of your case, if you are choosing a bankruptcy attorney that has experience and has filed several cases, you will have someone on your side that knows the key players in the game. Bankruptcy is a small world. We see the same bankruptcy trustees on a regular basis and develop professional relationships with them. It is always nice to know that you have that on your side when you are involved in a complicated and, sometimes, stressful proceeding. Fear of the unknown is the worst. Why not choose to have someone assist you who has already navigated those waters?