Three potential pitfalls of filing bankruptcy pro se

People who file bankruptcy without legal assistance may make legal mistakes, file under an inadvisable chapter and misunderstand their rights as consumers.

For many people who are struggling with debt in Ohio, filing bankruptcy may be the only feasible path toward financial recovery. This method of discharging debt offers a fresh start for thousands of state residents each year. In the northern district of Ohio alone, 19,696 bankruptcy filings were initiated during the 12-month period ending on Sept. 30, 2016, according to U.S. Bankruptcy Courts data.

For many consumers who are considering bankruptcy, handling the expenses that come with the filing process can be challenging. As a result, they may consider reducing their legal costs by handling the entire process without an attorney. However, the following risk factors often make this approach inadvisable.

1. Legal errors

People who represent themselves during bankruptcy proceedings are held to the same legal standards as people who secure professional assistance. They must be familiar with the U.S. Bankruptcy Code and comply with the rules and procedures established at the federal and local level. Failure to do so may cost a person time and money by causing delays, conversion of the case to a different chapter of bankruptcy or outright dismissal of the case.

The risk of errors may be high for people who independently file bankruptcy because they cannot receive any guidance from members of the bankruptcy court. Judges, clerks and other staff are legally prohibited from giving advice on bankruptcy cases. This includes even basic information that might not seem like legal advice, such as instructions on completing paperwork.

2. Wrong path forward

Choosing the correct chapter of the U.S. Bankruptcy Code to file under may also be difficult for people who are not familiar with this area of law. Many people are able to choose between Chapters 7 and 13, and the optimal choice may depend on many factors, including the following:

· Personal assets. Chapter 7 bankruptcy involves the liquidation of assets, though some exemptions are available. Chapter 13 bankruptcy allows a person to begin a repayment plan and keep her or his property.

· Nature of the debt. Some liabilities, such as credit card debt, may be dischargeable at the end of bankruptcy. Chapter 7 bankruptcy may be desirable for people with more of these debts, while people with non-dischargeable debt may benefit from a Chapter 13 repayment plan.

· Personal income level. Income may also determine whether a person can enter into a repayment plan or qualify for Chapter 7 bankruptcy, which requires a "means test."

An attorney may be able to help a person assess which option is a better fit and avoid choosing a chapter that he or she is not actually eligible to file under.

3. Creditor issues

People who handle their own cases may also lack familiarity with the laws that pertain to debt collection practices during bankruptcy. For example, many people may not realize that filing bankruptcy begins an automatic stay, which can halt foreclosure and other collection activity. An attorney may be able to ensure that a person's rights are not violated as the bankruptcy case moves forward.

The potential for missteps and financial losses during the bankruptcy filing process make seeking further advice beneficial for most people who are considering handling it alone. Reviewing the situation with an attorney may help a person more realistically judge whether filing independently best serves his or her interests.

Frequently Asked Questions

  • I hear bankruptcy is a lot harder to file now. What is the difference?
    • Since Congress passed the new bankruptcy law in 2005, it is necessary to take two bankruptcy counseling courses. The first bankruptcy counseling course must be taken before you can file your bankruptcy petition, and the second bankruptcy counseling course must be taken before the court will issue the discharge order relieving you from your debt. Both bankruptcy counseling courses can be taken on-line for a small fee, and can be done in a few hours.

      There are also stricter requirements on who can get a total discharge of debts under a Chapter 7 bankruptcy. You must earn under a certain annual income for your area of residence, or you must be able to pass a means test provided for by the bankruptcy law. Under this means test, your income is matched against a formula for average monthly expenses in your area of residence to determine your monthly disposable income. Your debts are compared with your monthly disposable income to determine if you can afford to pay your debts. If you do not pass the means test, you may still get bankruptcy protection through a Chapter 13 bankruptcy where you pay some or all of your debts through a payment plan. While these restrictions limit some people, the bankruptcy attorneys at Bailey & Gunderson have found that the vast majority of people who need the protection of a bankruptcy are still able to take advantage of it.

  • Can I get all debts discharged through Bankruptcy?
    • Under Chapter 7 bankruptcy, you may get a total discharge of your debt. However, some of your debts may not be dischargeable. For instance, income taxes may not be discharged except where the debt is at least three years old, and you filed your income tax return timely. Student loans and child & spousal support obligations are also not dischargeable. Debts incurred through fraud are, likewise, not dischargeable. You may, however, apply to pay these debts through a Chapter 13 payment plan. The bankruptcy attorneys at Bailey & Gunderson can show you how.

  • What happens in a Chapter 13 bankruptcy plan?
    • In a Chapter 13 Bankruptcy plan, you typically pay your debts over a 3 to 5 year period. Each month, you make a payment amount (usually through a wage deduction order from your paycheck) which is then distributed by the bankruptcy trustee to your creditors. Secured debts, such an automobile loan, shall be paid through your Chapter 13 bankruptcy plan. Your non-secured debts will be paid from 1% to 100% of the total amount of your non-secured debt, and will be paid interest-free. The percentage of your non-secured debt that you must pay will initially be determined by the bankruptcy attorneys at Bailey & Gunderson. Once you have completed your Chapter 13 Bankruptcy plan, any remaining debts not paid through your Chapter 13 bankruptcy plan shall be discharged.

  • Will I lose my house, car or retirement savings by filing Bankruptcy?
    • The bankruptcy attorneys at Bailey & Gunderson will work with you to minimize the assets (if any) you may have to surrender when you file for bankruptcy. You are entitled to keep a certain amount of assets, which are "exempt", from seizure by creditors or the bankruptcy trustee. If the Chapter 7 bankruptcy exemptions do not provide enough protection, the bankruptcy attorneys at Bailey & Gunderson can develop a Chapter 13 bankruptcy plan that will preserve your assets.

      Working without an attorney, or with inexperienced counsel, may result in unpleasant surprises for you, as you may have to forfeit assets that you could have saved with better planning. The bankruptcy attorneys at Bailey & Gunderson can show you how.

      The attorneys at Bailey & Gunderson have filed over 1,000 bankruptcy cases. We offer a free initial consultation, and reasonable payment plans for our bankruptcy clients.

      Since 1995, the law firm of Bailey & Gunderson has assisted bankruptcy clients in the greater Cincinnati area (Hamilton, Clermont, Butler, Warren, and Brown Counties). If you have questions or need information about bankruptcy, please call our Cincinnati office at 866-540-8424, or email us.

  • Why Choose a Dissolution of Marriage?
    • A dissolution of marriage offers many advantages over a traditional divorce. The first consideration for many couples is that a dissolution of marriage is a much faster process than a contested divorce. Once your petition for dissolution of marriage has been filed, a hearing before a judge or magistrate shall occur within 30 to 45 days. A dissolution of marriage is usually much less expensive - both in terms of attorney fees and costs, as well as emotionally, because the spouses resolve the issues between them by agreement.

      It is a common misunderstanding that in a dissolution of marriage, the couple hires one attorney who works with them to resolve the issues and generate a separation agreement. In fact, an Ohio attorney can only represent one of the spouses. The family law attorneys at Bailey & Gunderson help to identify all of the issues which need to be addressed in your unique situation. Our firm will work with you to identify all of the assets and debts associated with the marriage, and to determine the most equitable and fair distribution of those assets and debts between the spouses. We also are committed to serving the best interests of your children. Some parents choose to have a shared parenting plan, which allocates the parental rights and responsibilities between the parents, including parenting time, child support, decision making, and payment of health insurance & expenses.

  • What Factors Does a Child Support Calculation Take Into Account?
    • Ohio child support law uses a formula to calculate child support. The law and the formula it establishes look at a number of factors in determining child support. These factors include:

      * The number of children involved

      * The gross annual income of both parents

      * The monthly child support obligations of either parent for other children

      * Existing spousal support obligations from previous marriages

      * Monthly day care, education and health care expenses

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