Recently the court released information on the number of people who represent themselves in bankruptcy. Arizona ranked third overall in number of "pro se" bankruptcy filers. In fact, in Arizona, a full 20% of bankruptcy filers were doing it without the aid of an attorney. At the risk of sounding self-serving, there are tremendous risks to filing your bankruptcy case on your own. This article will go over some of the challenges and why hiring a bankruptcy lawyer is the best route to go when filing bankruptcy in Phoenix, Arizona.
Failure to Disclose
The documents filed with the bankruptcy court are lengthy (45-60+ pages) and there is much more to the process than "filling in forms." The bankruptcy process requires that you disclose everything. You will be required to sign your name on the documents declaring, under penalty of perjury, that you have truthfully disclosed all of your assets and financial transactions. While the forms will inform you generally of what needs to be disclosed, there are certain things that unless you are trained in the law in bankruptcy you may not complete correctly.
For instance, you are required to list all "transfers" of property. Does this mean property that you sold? Property that you gave away? Are we talking about yard sales or transferring cars? And what if the transfer was to an "insider." What is an "insider"? There are many potholes you can fall into as you complete the bankruptcy petition, schedules, and statements that can have lasting consequences to your case and even put you in danger of committing perjury.
Danger of Losing Assets
The most common I danger I see for people filing their own bankruptcy here in the Phoenix area is the loss of property. If you file a Chapter 7 bankruptcy case, unless your property is exempt under Arizona law, the bankruptcy court may take it and sell it for the benefit of your creditors. Knowing what the exemption laws are and when they apply is vital to protecting your assets. I have seen on various occasions debtors who have prepared their bankruptcy case themselves and filed it thinking that certain assets where protected, only to find out too late that what they thought was exempt, isn't, and now they have a bankruptcy trustee breathing down their neck for the asset.
Most people who go through the Chapter 7 bankruptcy process don't have to lose any assets. However, not understanding Arizona's exemption laws can prove devastating to your case.
Getting a Chapter 13 Bankruptcy Confirmed
If you must file Chapter 13 bankruptcy you are required to submit a plan to the bankruptcy court as to how you are going to deal with your debts. There are numerous rules that you must follow in preparing this plan. If you follow all of the rules, the bankruptcy trustee and bankruptcy judge will sign off on your plan through a process known as confirmation.
Confirmation of a Chapter 13 plan can be difficult for experienced attorneys, let alone pro se bankruptcy filers. There are numerous variables that must be taken into consideration. Further, your creditors can object to the confirmation of your Chapter 13 plan. If you don't adequately respond to objection or understand the rules that govern Chapter 13 bankruptcy, the likelihood of you getting your Chapter 13 plan confirmed are almost zero.
I was at a meeting once with a Phoenix area Chapter 13 bankruptcy trustee who told a Chapter 13 bankruptcy debtor who was representing himself that she had never seen a "pro se" Chapter 13 bankruptcy plan confirmed. These cases are usually dismissed or converted to a Chapter 7 bankruptcy.
I understand that the cost of a bankruptcy attorney can be difficult to deal with, but in my experience, those who find a way to hire a bankruptcy attorney end up saving money in the long run and can have the peace of mind that their case will proceed as smoothly as possible.
In sum, if you need to file for bankruptcy and you live here in the Phoenix area, hire an attorney. Even if you don't hire me, hire a bankruptcy attorney. You have a much higher chance of being successful and obtaining the fresh start you are seeking.
My bankruptcy consultations are always free. Give me a call at (480) 420-4028 or shoot me an email at firstname.lastname@example.org and I would be happy to talk with you about your situation.