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Don't Do-It-Yourself Bankruptcy

The internet has made practically everything do-it-yourself friendly. With no more than a google search and a few clicks you can find instructional videos, timelines, documents, and step-by-step instructions for just about anything.

But, just because I can find a video titled: “Everything you’ve ever needed to know about fixing that clogged sink,” doesn’t necessarily make me a plumber; and when I’m standing in my kitchen, ankle-deep in backed-up sink water, I’m going to pretty excited that google also has that “businesses near you” option.

This same concept applies to filing bankruptcy by yourself in Louisiana, or any state. Unfortunately, an incorrectly filed legal case can cost you a lot more than a kitchen full of water.

While chapter 7 may seem pretty straightforward there are many things to consider before making the decision to file your case, especially if you will be representing yourself.

Let’s look at the facts:

According to a recent federal bankruptcy court pro se filing report states that an average of 99% of all chapter 7 cases filed with help of an attorney receive a discharge. When filing pro se, that number drops to 61%

Over half isn’t bad but it isn’t nearly as good as 99%

What could possibly go wrong in a Chapter 7 Bankruptcy case?

The danger of hiring a Pro

There are many small and large mistakes in procedure that can result in a Ch. 7 case being dismissed. Let’s take a look at some of the most common mistakes made Pro Se in Ch. 7 filings:

  1. Filing the incorrect chapter of bankruptcy
    1. What chapter bankruptcy a couple of individual should file is based largely off income, how much debt is owed and to whom, and what the debt is related to i.e. secured v. non-secured debt.
      1. If you file under a chapter of bankruptcy that you do not qualify for you may need to convert you case to the correct chapter or you case will be dismissed
    2. Failure to file the required documents
      1. The bankruptcy code is strict and leaves little wiggle room for documents that are completed incorrectly, show inaccurate information or filed at the incorrect stage of a case.
    3. The Chapter 7 Means Test
      1. In order to file chapter 7 bankruptcy, a debtor or debtors must first ‘pass’ the chapter 7 means test. This ‘test’ is how the court determines a debtor(s) ability or inability to repay debt. It is based largely on income and property exemptions
    4. Incorrectly claiming property exemptions
      1. Part of filing for chapter 7 bankruptcy is that the debtor’s assigned Trustee may sell property in the bankruptcy estate in order to help re-pay specific debts. If a property is claimed as ‘Exempt’ then it is property that cannot be collected and sold to cover debts. Exemptions are found both within the federal bankruptcy code as well as in local bankruptcy rules. If someone does not fully understand property exemptions then he or she may end up losing property that otherwise would not have been seized by the Trustee.
    5. Failure to file reaffirmation agreements or not understanding the terms of filed agreements
      1. If you file a chapter 7 bankruptcy and would like to keep debt that is secured by property (usually a home or car loan) then you must also file and abide by a reaffirmation agreement
        1. If you do not file a reaffirmation agreement or incorrectly file one, then you will lose the property associated with that debt
        2. If you file a reaffirmation agreement but don’t fully understand the terms of that agreement you may end up paying more to your creditor that you originally owed or otherwise still lose the property you were working so hard to keep
      2. Not or incorrectly responding to a Creditor’s Claim Objection
        1. In bankruptcy, debtor(s) file schedules of debt owed. If a creditor feels that the debtor owes more than reported in the bankruptcy filing, that creditor may file a claim objections. These objections must be responded to within a certain timeframe, with certain forms, and include specific information that can be difficult for a debtor to compile. Not responding to, or incorrectly responding to a creditor’s objection can result in a dismissal.

What about the cost of filing Bankruptcy with an Attorney?

Bankruptcy lawyers cost money, yes; but, the bankruptcy code has rules for attorneys’ fees, just like everything else. All fees must be disclosed to, and approved by the court, or that attorney will suffer consequences worse than having a case dismissed.

It’s also important to remember that filing for bankruptcy without an attorney isn’t free either. If you file a chapter 7 bankruptcy case in Louisiana you will be charged $245 in filing fees, $75 in admin fees and $15 in Trustee Surcharges, just to get the case started.

What will happen if your case is dismissed?

It depends on why and during what stage of the bankruptcy process your case was dismissed in; but the typical restrictions are:

-A Judge may put a ban on filing another bankruptcy case for months, years, or even disallow a discharge altogether

-You will also lose the protection from foreclosure, repossession, and garnishment that a bankruptcy filing provides

Still considering filing Bankruptcy on your own?

The best thing you can buy is financial free; but that’s because this legal advice is free:

Many Louisiana bankruptcy attorneys provide free consultations. If you’re considering filing bankruptcy without an attorney in Baton Rouge or New Orleans, it would be a good idea to take advantage of a free consultation so you can learn more about the bankruptcy process and make an informed decision on filing.

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