Filing bankruptcy alone can cost you more.

It’s not secret that legal services are often expensive, and when it comes to bankruptcy cases it’s also no secret that the laws are complicated and hard to grasp for the average citizen. You can save money by filing bankruptcy alone vs hiring an attorney, but you must remember that without representation it’s you and only you who’s responsible for the accuracy of your bankruptcy petition.

Since the laws changed over two years ago, it has become more difficult for filing bankruptcy yourself. It is now required for filers to take credit counseling courses before filing bankruptcy and also the income requirements have changed making it tougher to discharge all your debts, in some cases it is necessary to repay some of the debts under chapter 13 bankruptcy, depending on your yearly income.

The changes also made it more difficult for bankruptcy attorneys to determine eligibility and more paperwork now needs to be filed increasing the time and effort it takes to produce and accurate bankruptcy petition, therefore raising the overall costs of bankruptcy services across the country. Filing “pro se” (on your own), saves you the legal fees, however the risks you take by filing bankruptcy yourself are too great to spare the professional help.

The new provisions make it much easier to make mistakes if you are not throughly familiar with the new laws, so that if you file your case alone and are denied because of inaccuracies you may be penalized and may not be able to file again for some time. If you’re asking yourself “should I file bankruptcy alone?” consider first if you’re willing to take the time to learn the applicable laws and prepare your petition correctly. Knowing whether to file bankruptcy alone is as important as when to file bankruptcy.

The consequences of making mistakes can range from losing the “automatic stay” protection to getting your case dismissed, which can often result in losing property or other collateral possessions like a car, furniture etc. If you’ve got your mind made up or know what you’re doing then you can proceed with filing your own bankruptcy case, starting with the chapter 7 bankruptcy forms and chapter 13 bankruptcy forms, which you need to download.

Hiring a bankruptcy attorney

Courts frown upon having to process pro se filers since the denial rates are so high. When you have representation your chances of being denied minimize significantly. Why? That is what bankruptcy attorneys do and nothing else. This is a very specialized field of law and requires extensive knowledge of specific laws in the bankruptcy code. If you are willing to pay thousands of dollars for a root canal operation why would you not pay for representation on something that will effect your entire life?

When you file bankruptcy with legal representation, you can have piece of mind that your case will be handled properly. Bankruptcy forms include several pages for reporting income, assets, taking into account past tax years and overall debts that must be reported accurately to the court when your petition is filed. It is possible to fill out the paperwork on your own but the legal jargon on the forms often leaves the average citizen guessing.

When you do hire a bankruptcy attorney, you should always be selective in the process. Do they offer free bankruptcy evaluation to determine if filing bankruptcy is the most appropriate step for you to take to eliminate your debts? Your attorney should take the time to answer your questions and put you at ease, he should be compassionate and understanding of your situation. Find a bankruptcy attorney with experience in an established firm.

Some law offices charge a fee for giving you your initial consultation, but if you are strapped for cash then free consultations are a must. You do not want to pay for the initial consultation unless the lawyer you visit was highly recommended to you by someone you trust. There are too many law offices, however, that offer free bankruptcy consultations so don’t settle for the first office you call. Search for an experienced attorney, ask for a free consultation and learn the process. With legal representation you will stand the best chance of getting your petition prepared accurately and your case successfully processed.

Assuming you have exhausted every option and found no clear alternative for bankruptcy, we’ll proceed with walking you through the process of how to file bankruptcy by addressing the two most common ways to do this. First by filing with a bankruptcy attorney and then filing bankruptcy alone.

How to file bankruptcy with an attorney

One way to do this and the most common, is by simply contacting a bankruptcy attorney to prepare your bankruptcy petition and file your case. Your attorney will explain the process of bankruptcy and the terms of his/her representation of you. Some consultations are free and some you have to pay for. It really all depends on the firm’s policies, I would suggest you stick to saving as much as possible so try not to pay for a consultation and make appointments only with firms that don’t charge for this. Bankruptcy consultations should really be free.

Your lawyer will determine which bankruptcy chapter is best for you, based on your financial situation and by completing the BAPCPA’s bankruptcy means test, which helps him determine your eligibility. Write down all your doubts, concerns and questions about the process and when you get the answers write them down also. I would also suggest you seek consultations from at least three firms, shop around because not all bankruptcy attorneys charge the same fees. You’re looking for somebody who’s modest in pricing and who’s also honest and a little sympathetic to your case. To some lawyers you’re just another case number, while others will treat you with a little more respect and dignity.

Once you have got all your information from your attorney, take some time to study it all, and read over the notes you made when you asked questions. Discuss everything with your spouse if you’re married, let it soak, do some more online research on your own and read other people’s posts on bankruptcy blogs and forums.

The fees will vary per law office. Some are as high as $2000, while you may find others that only charge $700. It all depends on where you are in the country. Remember also that just because a lawyer charges a high fee, doesn’t mean that they’ll have the best service. You’ll also need to pay the court’s $299 filing fee if you’re filing bankruptcy chapter 7 or $235 if you’re filing bankruptcy chapter 13. These are fees that the court charges to process your case.

Your attorney will most likely give you a list of things he/she expects you to bring back with you when you’re ready to file bankruptcy. Here’s a quick list:

• Income Tax forms for the last two years
• Income information – current employer, two to three weeks of pay stubs
• Debts spreadsheet – a list of all your current debts including utilities and such.
• Valid identification – Driver’s license, social security card etc.
• Your credit report

Once you’ve provided all this information, your attorney will prepare the bankruptcy petition for you. When that is completed you’ll get a call back to sign your paperwork and then that petition gets submitted to the local bankruptcy court. Prior to your paperwork being submitted you must complete the first part of the credit counseling course required by the court. The second part can be taken after your meeting in court and before your discharge. The credit counseling portion of the process are new implementation of the bankruptcy law changes from Oct of 2005.

One your petition is filed, you’ll be sent an appointment letter for you to show up to court for your hearing, about 30 days from the day of your petition and you’ll be notified in writing with plenty of time about this as well.

During your hearing in court, you’ll meet the bankruptcy trustee assigned to your case. The trustee will examine your case and get a good idea for the reality of your situation. The trustee’s role is to make sure that your file is in order and that all expense reports are accurate and you’re not hiding anything, he also needs to find additional assets that can be liquidated so that your creditors can be paid before you can get a bankruptcy discharge.

You’ll be asked questions by the trustee during this meeting, but don’t get nervous and don’t sweat it, he’s only going over your paperwork and making sure everything you submitted is accurate. It’s not a court room scene from “law and order” it’s just a normal proceeding. Answer honestly and don’t bother providing any additional information outside of what’s being asked. Simply answer the question and wait for the next one.

Unless there is more information the trustee wants to see from you, you won’t need to go back to court again. At that point you can assume that your case is good to go and that it will be discharged. For this to occur another 2 to 3 months may go by if you’re filing bankruptcy chapter 7, otherwise if you’re filing chapter 13 your case can last longer since your repayment plan still needs to be submitted by you and approved. Don’t worry about the time it takes just use this time to save all the money you can and work out a plan of action for what you need to do after your discharge.

Filing Bankruptcy Alone

The procedure will be the same, though filing bankruptcy alone is harder and not recommended. When you file alone the court and the trustee will make the assumption that you have the knowledge to handle the proceedings on your own. If there are inaccuracies in your paperwork it will be your responsibility.

The first thing to do for your process is to download the bankruptcy forms from The US Courts website, these forms come with instructions and you must read these carefully since they also have detailed information on how to file bankruptcy for yourself.

Once you’ve filled out your forms, take the time to sign up for the credit counseling course and take the first part immediately, then you need to gather all your required documentation in the list above and head to court to file your case.

The same thing will happen here where you wait for your appointment letter then head back to court to meet with the bankruptcy trustee about your case. You’ll answer questions in the same fashion. Even when accompanied by a attorney, the questions will only be directed to you and your attorney will participate very little during this time, unless something specific is needed.

Often times when filing bankruptcy alone, you’ll end up returning to court because of something that’s missing from your file, and these are usually important pieces that most people will neglect. The instructions are there to guide you but often people forget or overlook certain things that can cost them to have to return to court or sometimes resubmit their bankruptcy petition again.

Another disadvantage of filing bankruptcy alone is that usually individuals think they can outsmart the bankruptcy trustee, and this is often where things go very wrong. People think they can hide assets or liquidate before filing without anybody knowing about it. This is very risky especially if these are paper assets or registered high valued items like a car or real estate property. That’s why hiring an experienced bankruptcy attorney is the best option, you’ll get all these instructions ahead of time an be advised about what to do and what not to do.

Once you get past the court hearing without any problems, then you should expect to get discharged within the next 2 to 3 months, in which case you should complete the second part of the credit counseling and be done with it.

You’ll receive your bankruptcy discharge via mail, when that arrives keep it somewhere safe and make sure you make copies to submit to any creditor that tries to collect afterwards, they may try, so keep your bankruptcy records in order and your discharge papers ready to present in case that happens to you.

Typically for pro-se filers (self filers) it is most adequate to file bankruptcy alone when there are no assets to liquidate and the filer is mostly burdened by unsecured debt like credit cards. In cases like this you would mostly likely file for bankruptcy chapter 7 and even if you don’t know much about how to file bankruptcy, you can, in most cases, handle your own file if you take the time to read the bankruptcy laws that apply to you. If you’re filing chapter 13 or a restructuring of your debts, this process will be awfully complicated and you should consult a bankruptcy attorney to handle your case.

The only other thing to do now is start all over, by monitoring yourself constantly and making the commitment that this will not happen to you again, many times people hear that this is not their fault and they take that to heart making them selves feel as the victims of debt. Unless you suffered unforeseen incidents such as identity theft, divorce or a death in the family, you have to realize that you were driving all along so take account of your previous actions and make sure you make a positive change.

Should I file bankruptcy? What’s a good alternative to bankruptcy?

By now you know that filing bankruptcy should be your last resort. Coming up with an alternative to bankruptcy when you’re stressed and losing sleep can be difficult so here’s some help. But outside of what is listed here, whatever options you believe are possible, research and consider all options to decide whether that alternative is realistic and feasible for you. The following are some of the most common alternatives to bankruptcy:

Renegotiate with your creditors: This can be a successful bankruptcy alternative when dealing with unsecured debt, make them understand that if renegotiating is not possible, they will lose all the money you owe them if you have to resort to personal bankruptcy. This, as you know, is the case with unsecured debt under bankruptcy chapter 7, it gets discharged with no further obligation to you. Secured debt on the other hand will be a little more complicated but still possible. Your home lender or car financing company will know that they must wait around without your payments for months if you have to file bankruptcy. So they may listen to your case but are more than likely going to try to take you through a refinancing deal, which could actually accumulate other costs. So be careful there, this is a renegotiation that needs to benefit you the most.

Debt Consolidation Services: This also could work out well for your unsecured debt, but not all debt consolidators work the same so you need to shop around. You must also be careful with the terms of this deal, some debt consolidation alternatives will cost you more for the simple plan of grouping all your debts into one bill. Many of these agencies can really help, but there are many that only pose as non profit organizations for debt consolidation and are only interested in profit, so do your homework and research them before you agree to anything. You must insist on better rates and this can be an excellent bankruptcy alternative especially if your credit is still in good standing.

Debt Reduction Lawyers: Depending on your current budget this can be an effective bankruptcy alternative as well, since a lawyer would be much better at negotiating terms and rates for you, a creditor will likely respond better to talking to a lawyer than talking to you directly. A lawyer can deal with every single creditor for you and help you take advantage of special provisions and hidden laws and tricks that creditors don’t like consumers to know, but are legal. Your local yellow pages book will have tons of listings for law offices that can provide these services.

Professional Credit Counseling: One of the most common services to consumers and not necessarily a bankruptcy alternative in all cases. If you don’t see the end near you yet, but you see the direction your finances are taking and are uncertain about what to do to avoid collision, professional debt counseling could be what you need. A professional credit counselor is going to suggest drastic changes in your financial routines. They’re not going to ease you into these changes, they will most likely be very straight forward about what needs to change. It is up to you enforce these changes and make this alternative work or you could in fact end up filing bankruptcy

Other sources: Other sources of help may be possible, you may have volunteer groups in your area of perhaps you local church may be able to direct you in the right path. People in these groups are often able to help without charging anything if they offer services. Whatever option you choose, please take care not to simply borrow more money to repay debts, by doing this you’re simply shuffling balances around to temporarily satisfy debts, while accumulating debt in other areas, not really a good bankruptcy alternative.

Don’t let anyone talk you into taking out a line of credit on your home, especially if you’re dealing with unsecured debt. If you do this, you will have taken that unsecured debt and made it secured against your property. Most lenders will tell you this is a good idea. Their job is not to give financial advice, their job is to sell and they sell well because often people don’t know any better, so this is also not a good bankruptcy alternative.

If none of these options seem feasible to you for whatever your circumstances, then it is probably best that you begin your process by first consulting with a bankruptcy attorney. Get all the facts about your case. Not all cases are the same, the conditions will depend on what you owe, what assets you have and whether you’re employed or not. Consult with at least three different attorneys, most consultations are free and you’ll find that some law offices are more personable and more sympathetic than others. During this consultation take the liberty to ask your attorney for any bankruptcy alternatives he or she can recommend, again they may be able to come up with something you haven’t thought of.