Do I Need a Bankruptcy Lawyer to File Bankruptcy?

Bankruptcy is a major, life-altering event. Some people rank bankruptcy just below the death of a loved one, experiencing a life-threatening illness, and divorce, in terms of the damaging impact it can have on your life. Clearly, bankruptcy is not to be taken lightly, and this is especially true in light of the new bankruptcy laws. But is a bankruptcy lawyer necessary to file bankruptcy? And if not, what are the pros and cons of using a bankruptcy attorney?

You Can File Bankruptcy on Your Own

Legally, an attorney is not necessary for you to file bankruptcy. This is not to say that it is a good idea to embark on such a life-altering path without a trained professional by your side, but if your aversion to lawyers is stronger than most people's, you can go it alone. Alternatively, you could use a paralegal service to help you file bankruptcy, which typically results in several hundred dollars in savings when compared to attorney's fees. But buyer beware: You get what you pay for.

Under the new bankruptcy laws, lawyers are responsible for errors and omissions on their clients' bankruptcy petitions. Although this requires more work on the part of the bankruptcy lawyer (and thus higher attorney's fees for you), it greatly increases the likelihood that your petition is accurate and thorough. By contrast, if you file with the assistance of a paralegal service, you - and only you - are responsible for the accuracy of your petition, and if there are any errors or omissions, you can be found guilty of perjury.

The Cost of Filing on Your Own vs. Using a Bankruptcy Lawyer

As if people forced into bankruptcy don't feel bad enough, the new law seeks to make them feel even worse. No longer are bankruptcy filers presumed to be honest people who got in over their heads - now they're thought of as likely criminals who are trying to cheat the system, or at best, financial children who need to be taught how to balance their checkbooks. In fact, you now have to enroll in credit counseling before filing either a Chapter 7 or Chapter 13 bankruptcy, and sign-up for a demeaning "budget management" class after your bankruptcy is processed.

Worst of all is the way that the new bankruptcy law turns the traditional lawyer-client relationship on its head. Previously, as with all other matters of the law, your bankruptcy lawyer was your advocate. But with the new bankruptcy law, lawyers are personally responsible for any incorrect information in your filing, which changes their role from ally to interrogator. Now, even your own lawyer will find you guilty until proven innocent, and all of the extra work that he or she has to do verifying your claims takes time and money, which means that lawyers have to charge their bankruptcy clients higher fees.

Is Bankruptcy Right for You?

The Chapter 7 and 13 bankruptcy filing fees are $274 and $189, respectively. Attorney's fees for Chapter 7 are typically between $1,500 and $2,000, while Chapter 13 is significantly more expensive, averaging between $2,500 and $4,000. Paralegal services usually charge $1,000 or less, but the real cost can be the money and/or property you lose due to inadequate representation.

For example: If you or a paralegal make an honest mistake on your bankruptcy petition, it could result in having your entire case thrown out. Worse yet, a simple, honest mistake could open the door for one of your creditors to exempt themselves from your bankruptcy filing and thereby force you to sell what you thought was exempt property in order to make good on what you thought was a discharged debt. This happens all of the time with do-it-yourself or paralegal cases, but only very rarely with qualified bankruptcy attorneys.

This does not mean that you absolutely should not file bankruptcy on your own or with a paralegal service. There are exceptions to every rule, and your case may be that exception. People who are particularly educated, confident, and well-versed in law are the best candidates for a do-it-yourself filing. Your legal education can begin here at Debt Relief USA.

• Bankruptcy Alternatives - Other Ways to Survive Overwhelming Debt
• Bankruptcy and Credit Counseling - New Law Dictates Mandatory Classes
• How to Avoid Bankruptcy
• Is Bankruptcy Right for You? - A Summary of the New Bankruptcy Laws
• Two Types of Bankruptcy - Chapter 7 and Chapter 13
• Learning More About Your Bankruptcy Options

• Can filing bankruptcy stop my creditors from harassing me?
• How does the new bankruptcy law affect me?
• What alternatives are there to filing bankruptcy?
• What is better for my credit, filing bankruptcy or enrolling in a debt repayment plan?
• What steps do I need to take before I file for bankruptcy?
• What's the difference between chapter 7 and chapter 13 bankruptcy?
• Will filing bankruptcy wipe out all of my debts?

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