I often hear or read discussions on whether it is truly necessary to hire an attorney when filing for bankruptcy. After all, most people who are contemplating bankruptcy don’t have a lot of extra cash lying around. While I am clearly biased in attempting to answer this question, I wholeheartedly recommend that you seek out an attorney to represent you through the bankruptcy proceedings. There are three reasons why I would recommend seeking representation: (1) bankruptcy can be very complex; (2) you may be at risk of losing your personal belongings; (3) your creditors have attorneys representing them.
First, bankruptcy law can be very complex. There are cases that are quite straight forward without much in the way of legal complexities. However, many cases are complex. The bankruptcy code, like most federal legislation, is lengthy and at times quite difficult to follow. If you are not familiar with the Code and the requirements under the Code, you could end up making a mistake that could result in your case being dismissed. In addition to the bankruptcy code, there are local rules which apply to cases filed in Arizona that may change how a bankruptcy code provision is dealt with in Arizona. And finally, there are local customs between the bankruptcy attorneys, courts, and trustees as to how cases are handled. Having a bankruptcy attorney there to guide you through this bankruptcy process is worth the cost.
Second, if you make a mistake, it may cost you your personal belongings. In Chapter 7 bankruptcy cases, if you have property that you own free and clear of any liens or encumberances, you may be required to turn that property over to the bankruptcy trustee to be sold and paid to your creditors. However, Arizona has exemption laws that deem most people’s property as “exempt”, meaning that the trustee would not be able to take it. If you fail to exempt your property correctly you may lose it to your creditors.
One time I was down at the bankruptcy court with a client attending hearings before the trustee. There was a person meeting with the trustee right before he was to meet with my clients. The trustee noted that this person owned a parcel of land free and clear and had just recently sold his home. The trustee informed the person that he would be auctioning off the parcel of land and distributing the proceeds to his creditors. The person was shocked, and said “but I am claiming my homestead exemption in the parcel of land, so that I can keep it!” The trustee then informed him that the homestead exemption in Arizona does not apply to vacant land, and thus he would be losing the property. You can avoid tragic situations like this by having competent counsel to guide you through the bankruptcy process.
Third, it is a good idea to have an Arizona bankruptcy lawyer representing you because your creditors will have attorneys representing them. While many, if not most of your creditors, will not make an appearance in your bankruptcy case, creditors who are owed money on a mortgage loan, a car loan, and some business loans, will likely make an appearance to protect their client’s rights in the asset that you hold (i.e. your house or car). Further, your creditor’s attorney may determine that they should be permitted to repossess your car or foreclose on your house, even while you are in bankruptcy. They will have to file documents with the court to get this permission, and it will be a tremendous help to have someone on your side in addressing these issues.
Many of us would not attempt to do things like car repairs on our own, but will jump right in when it comes to representing yourself in federal court. It is understandable that because of the financial distress you are going through that you would not want to pay more money out to an attorney, but in the end it may end up costing you more than what the attorney would have charged you. I, like most bankruptcy attorneys, charge a flat rate for bankruptcy representation, meaning that you will know exactly what the entire bankruptcy case will cost you before you file.
If you would like a free consultation an Arizona bankruptcy attorney at JacksonWhite would be happy to meet with you to discuss your specific situation and determine if bankruptcy is a good option for you.