Interviewer: Do you have people that think they can just file on their own and they don’t need the attorney? How would you contrast someone trying to do it themselves versus someone who has an attorney’s representation and counsel?
Brad Weil: Good luck, that’s what I would tell some not retaining an attorney for a bankruptcy. Usually those are people that either have some sort of legal background, they’ve been a paralegal or they’ve worked in an attorney’s office, or they’re trying to do it on the “cheap.”
Bankruptcy Petition Preparer Services Cannot Dispense Legal Advice
There is what we call bankruptcy petition preparers; which are non-lawyer, paralegal services that will prepare the paperwork for you. They’ll fill out the forms. But you have to provide everything. You have to give them all the information to populate the forms. And they’re not allowed to give you legal advice. And if you do use a bankruptcy petition preparer and they get something wrong, you have to fix it on your own. This is because the bankruptcy petition preparer is not a lawyer.
Bankruptcy Is Not a DIY Project: You Can Face Losing Assets That You Might Have Exempted If Had You Retained an Attorney
They can’t go fix it for you and they can’t tell you how to fix it. And I’ve seen trustees at 341 hearings basically tear individuals apart. And I’ve seen individuals lose assets that they could have legitimately exempted and kept. I’ve seen people lose cars – in an extreme example I saw a woman lose her house to the trustee, because she didn’t use the right exemption. She used the bankruptcy petition preparer and the trustee took her house. That’s not the trustee’s fault frankly, that’s the client and bankruptcy petition preparer’s fault.
If You Have a Complex Case or Many Assets, It Is Not Advisable to file for Bankruptcy without Retaining an Attorney
When you’re pro se, when you file a bankruptcy pro se, you are your own lawyer. And the law looks at a pro se filer as if they know the law, and they’ve chosen to represent themselves, and it treats them like a lawyer. And frankly, you could get torn to shreds. Now if you have a very simple case you might be able to do it and get through it, but if you have a complex case or you have assets, I would not recommend it.
And if you want to do a reorganization -if you want to do a Chapter 13 successfully – I definitely would not recommend it because I think the latest statistic I heard, only 1 percent of pro se, Chapter 13 filers, make it to discharge.
Chapter 7, 13 or 11: Which Bankruptcy Option Is Best for You?
Interviewer: What are some of the basic criteria or what’s some of the situations that would make a Chapter 7 better for you versus a Chapter 13 or a Chapter 11?
Means Test: Individuals Earning above the Median Income Do Not Qualify for a Chapter 7 Bankruptcy; a Chapter 13 Filing Is Subject to a Debt Limit
Brad Weil: There are legal criteria and there is what’s called a means test for a Chapter 7. If you make above what we call median income, you don’t qualify for Chapter 7. There are debt limits to a Chapter 13, so if you have above a certain level of debt, you don’t qualify for a Chapter 13.
Your Attorney Will Explain the Benefits of Each Type of Bankruptcy
I can tell, based on a person’s paycheck stubs and their tax returns, whether or not they make enough money and I can tell based on their credit reports whether or not they have exceeded the debt limits. I don’t tend to go by the legal criteria. What I tend to look at is what are the benefits of the chapter; what is your goal with the bankruptcy, and why are you doing it.
Homeowners with Non-Exempt Equity in the Home Should Consider a Chapter 13 Bankruptcy to Preserve Ownership
I ask three questions to determine whether to put you in a Chapter 7 or a Chapter 13. My first question is do you own a home? If you do own a home, do you have any equity in the home? This is because if you have what we call non-exempt equity, you’re better off doing a Chapter 13 to protect that home, which you might lose in a Chapter 7.