Should You File for Bankruptcy Without a Lawyer?

Anytime bankruptcy is on the table it means money is tight. Hiring a professional might seem out of reach. You might think you could save money by doing it yourself. But should you file for bankruptcy without a lawyer? Or will doing so hurt your chances of getting a fresh start?

How to File for Bankruptcy Without a Lawyer in Texas

Individuals have the right to represent themselves in bankruptcy court. You can file for bankruptcy without a lawyer if you want to. This is called filing “pro se.” Your local U.S. Bankruptcy Court makes all its forms available online. If you want to file for bankruptcy without a lawyer, you can complete those forms and submit them to the Bankruptcy Court for the Southern District of Texas.

Once you have filed the proper forms and paid your filing fee, the Bankruptcy Trustee will oversee your bankruptcy case including the liquidation of your assets or approval of your payment plan. It will be up to you to make sure everything is in order, attend a creditors meeting, and answer any questions the trustee may have.

Should You Use a Free Online Bankruptcy Tool?

There are free online bankruptcy tools available for debtors considering filing. However, most of these do little more than fill out the paperwork for you. It will still be up to you to decide which form of bankruptcy is best, file everything with the Court, and then follow through with the process.

Other online “credit assistance” programs can actually cost debtors more money in the long run, making it harder for you to get out of debt. If you do decide to file bankruptcy without an attorney, be sure you fully investigate any program or organization who offers to help you get out of debt “for free.”

Why You Might Not Want to File Bankruptcy Yourself

Bankruptcy attorneys do more than fill out the paperwork for you. Working with an experienced Texas bankruptcy lawyer can help you avoid several common mistakes petitioners make, which cause their bankruptcies to be dismissed without their debts being discharged.

Choosing the Wrong Type of Bankruptcy

There are two different consumer bankruptcy options: Chapter 7 and Chapter 13. Which one is best for you depends on how much you make, whether you can pass the Chapter 7 means test, the types of debts you owe, and whether you have significant assets (like a high-equity home) that you want to protect. A bankruptcy attorney can help you weigh your options and choose the right one to improve your financial situation.

Skipping Mandatory Credit Counseling Classes

There are two sets of bankruptcy-related credit counseling classes you have to complete:

  • Pre-filing credit counseling within 6 months before your petition is filed
  • Post-filing financial education, completed after your petition is filed, but before your debts are discharged

If you skip either of these steps, your bankruptcy could be delayed or dismissed, forcing you to start over. Your attorney can help you sign up for counseling and provide proof of completion to the court.

Ignoring Bankruptcy Exemptions that Protect Your Property

The Bankruptcy Code isn’t designed to make you get rid of everything. State and federal bankruptcy exemptions protect certain types of property (up to a set value). In Texas, you can choose whether to apply the Texas bankruptcy exemptions or the federal exemptions.

Unfortunately, many petitioners who file for bankruptcy without a lawyer miss key exemptions that could protect their most valuable assets. This can result in their property being sold when it could have been protected under the law. A bankruptcy lawyer can help you decide which one is best for you based on what you own and what you need going forward.

Missing Chapter 7 Documentation

There is a lot of paperwork in any bankruptcy. However, many people who file for a Chapter 7 forget to provide documentation about their various sources of income, debts, and most importantly, the value of their assets. This can delay your divorce process and cause you to scramble to gather bank statements, credit balance statements, and property value assessments after the fact. A bankruptcy attorney will ensure everything is prepared before you file, so your case can be resolved more quickly.

Unacceptable Chapter 13 Payment Plans

In a Chapter 13 bankruptcy, instead of selling off all your assets at once, you present the Bankruptcy Court with a plan to repay as much of your debt as possible over 3 to 5 years. Whatever unsecured, eligible debt remains at the end of that period is discharged. If you present an unacceptable repayment plan, your case could be delayed until you are able to come up with a solution the Bankruptcy Trustee will accept. Bankruptcy attorneys have prepared hundreds of these plans. They know what Trustees are looking for, and how to write an acceptable payment plan.

Failing to Reach Discharge

Unfortunately, many people who file bankruptcy without a lawyer don’t successfully reach the discharge stage. According to the American Bankruptcy Institute, people who represented themselves in a Chapter 7 bankruptcy were only successful about two thirds of the time. The outcome for pro-se Chapter 13 cases is far worse. Only 2.3% of consumers representing themselves successfully completed their payment plan and had their remaining debts discharged. Hiring a bankruptcy lawyer to help them significantly improved their chances. Lawyers got their clients’ debts discharged in 96.2% of Chapter 7 cases, and over 40% of Chapter 13 cases.

Can You Afford a Bankruptcy Lawyer?

With all the risks that come with filing for bankruptcy without a lawyer, you may wonder if you can afford one. Remember that bankruptcy attorneys work with people in debt all the time. There are a number of strategies to pay your attorney and still get your debts discharged. Having an initial conversation with a bankruptcy lawyer should always be free. At that consultation, you can review your options and decide whether to hire a lawyer, or file the bankruptcy yourself.

I’m Attorney Patrick T. Williams and I have been helping Houston-area residents get ahead of their debts for over 20 years. I want to help you file for bankruptcy, and see it to a successful discharge of debts, so you and your family can get a fresh start. Please call me or fill out an online consultation form to get started.