Do You Really Need A Bankruptcy Lawyer?

One of the biggest obstacles to filing for personal bankruptcy are the legal costs. The fees charged by the court are under $500 in total, but bankruptcy lawyers will charge you an additional $2,000 or more for services to file for bankruptcy. If you’re too broke to pay your credit cards and loan payments, how can you afford to hire a bankruptcy lawyer?

The question comes up, do you need a lawyer to declare bankruptcy? Or, can you file a do it yourself bankruptcy?

The law does allow you to file a bankruptcy yourself. When you file on your own behalf, this is called appearing “pro se”. But just because you can file on your own, does not mean you should. There is a ton of paperwork, deadlines, court rules and much more that you will need to know in order to do this on your own. Even the U.S. Bankruptcy courts warn that filing on your own can cause your case to be thrown out if you mess up any of these never ending details.

But let’s say you want to at least find out more, and learn exactly how to file for bankruptcy. First off, do you know whether you want to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy? Chapter 7 lets you discharge, or eliminate your debt, but you must meet certain financial guidelines (called a means test) to qualify. If you don’t qualify for Chapter 7, or you have assets you want to try to keep, like a house, you would file for Chapter 13, which lets you set up a repayment plan over three to five years.

If you aren’t sure what chapter to file under, you should read more about bankruptcy in general to find out what the differences are.

Once you choose the type of bankruptcy you want to file, you will need to have a guide to how to file a do it yourself bankruptcy. One of the best series of books are by Nolo Press, which at Amazon cost under $20.

If you are not able to be really organized or understand all the details to file on your own, what other bankruptcy options do you have? First, know that many lawyers will work with you on payments, allowing you can pay your legal fees over time, however your bankruptcy itself won’t be filed until your fees have been paid up.

But one of the biggest bankruptcy alternatives you have is to not file for bankruptcy at all! If you are willing to give up assets you have, for example allow your home to be foreclosed, or if you can work with your credit card companies to set up alternate payment plans, you may not need bankruptcy. Today, with a bad economic climate, more and more credit card companies are willing to set up payment plans to help people through tough economic times. The best idea is possibly to start there, and decide if you need the protection of bankruptcy courts in the long run.