Texas Bankruptcy Blog : Texas Bankruptcy Lawyer & Attorney : Fears Nachawati law Firm : Chapter 7, Chapter 13, Consumer Bankrutpcy : Dallas, Fort Worth, Austin, Houston, San Antonio

Three bankruptcy courts will participate in a pilot program to assist unrepresented bankruptcy filers. Courts in New Mexico, New Jersey, and Los Angeles, California were selected for the Pro Se Pathfinder Project, a computer software program that assists do-it-yourself bankruptcy filers in completing the bankruptcy petition, schedules, and forms. In an article published in the Albuquerque Journal, Norman H. Meyer Jr., clerk of the bankruptcy court for the District of New Mexico stated, “We want this to be more user friendly with a sort of Turbo Tax approach.”

The mechanics of filing the case are relatively easy and the courts attempt to make the process as accessible as possible. However, the Administrative Office of the U.S. Courts warns, “[w]hile individuals can file a bankruptcy case without an attorney or ‘pro se,’ it is extremely difficult to do it successfully.” A 2009 study by Emory University found that dismissal rates in Chapter 7 pro se cases were higher than those with representation, and that trend has increased since the new bankruptcy laws took effect in 2005.

Filing a bankruptcy case without an attorney is a tricky proposition, and the pro se debtor is ill-equipped to perform a pre-bankruptcy legal analysis of the case. This analysis includes an assessment of property, income, expenses, and debts. Often a small adjustment to one of these categories can mean a huge difference in the outcome of the case. For instance, delaying a bankruptcy filing by a few weeks or even months may mean the difference between a three to four month bankruptcy case with no payments, and a three to five year bankruptcy case costing thousands.

The paperwork filed in a typical bankruptcy runs between 30 and 40 or more pages. The information provided in this paperwork largely dictates the outcome of your bankruptcy case. Often the pro se debtor is under a tremendous amount of stress or must act quickly to file the bankruptcy to protect property from creditors. Consequently, the pro se debtor is apt to make mistakes that can impact the case.

An experienced attorney will perform a pre-bankruptcy legal analysis of your financial situation and discuss strategies to maximize the positive benefits of your bankruptcy case. Additionally, an experienced bankruptcy attorney has office processes and procedures to eliminate mistakes in your case.

If you are considering filing bankruptcy, don’t go it alone. The benefits of having experienced counsel to represent you will save you money, stress, and provide peace of mind. Your case will be handled professionally and effectively. Don’t risk losing your chance at a fresh start. Call today for a consultation.
 

Remember that time is money.
Benjamin Franklin (1748)

Several years ago Ian Walker, a professor of economics at Warwick University in England, developed a mathematical formula to show the personal cost of an activity like mowing your lawn or washing your car. The formula looks like this:

V=(W((100-t)/100))/C
V is the value per hour;
W is your hourly wage;
t is your tax rate (e.g. 15%, 20%, etc.)
C is the local cost of living, which is a baseline of 1.0. If you live in an area that is 50% more expensive than the national average, use 1.5

For a person making $20.00 per hour, and a tax rate of 25%, the value per hour is $15.00, or $.25 per minute. Spending an hour mowing your lawn is therefore a value over paying the neighbor boy $30. So let’s look at whether representing yourself in a bankruptcy case is a “value.”

A represented debtor in a Chapter 7 bankruptcy must at minimum collect financial information; spend time with counsel during the initial interview and petition signing; complete credit counseling; attend the 341 meeting; and complete a course in financial management. A pro se (Latin meaning “for himself”) bankruptcy debtor must spend time on these things as well. However, the pro se debtor has a lot to learn including applicable exemption laws, and the bankruptcy rules and procedures. Setting that “learning time” aside for the moment, let’s look at some actual administrative costs the pro se debtor must perform “for himself:”

Time spent preparing the petition. Even the simplest petition will take the pro se debtor time to read the instructions and properly prepare the schedules. Your bankruptcy attorney uses sophisticated petition preparation software and is skilled at completing these forms. 6 hours.

Most pro se debtors drive to the bankruptcy court to personally file the bankruptcy case, and must pay the filing fee with cash, a cashier’s check, or money order. Your bankruptcy attorney has access to the court’s electronic filing system and can file your case within minutes from the office. Time 2 hours.

Extra time at the 341 meeting. The trustee will schedule extra time to spend on your case. Usually, pro se cases are set at the end of the trustee’s docket, so you will have to wait extra time for your examination. 30 minutes.

Communications with the trustee. The trustee generally requires income information, bank records, tax records, vehicle titles, recorded deeds, and other information. The bankruptcy attorney will provide these documents to the trustee while a pro se debtor must prepare and send them. 2 hours.

Communications with the bankruptcy court. The clerk’s office at the bankruptcy court can assist a pro se debtor on certain procedures, but is prohibited from giving legal advice. Pro se debtors generally spend a considerable amount of time on the phone with the clerk’s office. 2 hours.

The pro se debtor’s total so far for these simple administrative activities is 12.5 hours, or $187.50. Now let’s add the time spent researching the bankruptcy laws and processes; and the time spent on correcting or amending the bankruptcy pleadings. Additionally, the bankruptcy judge requires that any pro se debtor must appear personally in court to reaffirm a debt - an appearance is not required for represented debtors. This “extra” time can easily amount to another 40 hours!

The moral of this story is: the representation provided by your experienced bankruptcy attorney is not an expense, it is a savings! By having a licensed, experienced bankruptcy attorney handling your case you will get peace of mind and your case will be handled efficiently without surprises. The actual cash savings to the pro se debtor is small at best, while the truth is that many pro se cases experience problems that result in lost property or case dismissal. Don’t be “penny wise and pound foolish.” Hire qualified counsel and get the legal relief you need.

Bankruptcy is expensive. Whether you are in a repayment plan or a Chapter 7 liquidation, court fees, credit counseling fees, and attorney fees can really add up. Some bankruptcy debtors are tempted to "go it alone" and file a bankruptcy case without an attorney. However, before you file a "pro se" bankruptcy, consider how your choice will affect your case.

First, proceeding pro se (Latin meaning “for himself”) does not entitle you to special treatment during your bankruptcy case.  The court expects and requires that you file all of the bankruptcy paperwork correctly, obey all of the orders of the bankruptcy court, and follow all of the proper procedures outlined in the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, as well as in the bankruptcy court's local rules. These rules are often supplemented by case law and the procedural customs of the trustee and the judge. 

Bankruptcy attorneys have studied these laws, cases, and rules during three years in law school, and years afterwards in actual practice representing real clients in bankruptcy court. Bankruptcy debtors benefit from the knowledge and experience of experienced bankruptcy counsel.

Second, the federal and state exemption laws can be very complex. In some cases criminal laws or collection laws may be implicated. Protecting your property is one of the chief goals of the bankruptcy process, and one of the easiest to foul up. Failing to properly protect an asset during bankruptcy could result in the loss of that asset, including a home, vehicle, retirement account, or other valuable property.

Third, even if the pro se bankruptcy debtor is able to navigate the bankruptcy procedure and adequately protect her assets, can the case withstand the scrutiny of the bankruptcy trustee? Because the debtor is pro se, the trustee will spend extra time evaluating the case and closely inspecting the bankruptcy paperwork. Frankly, the trustee does not trust the pro se debtor and will assume that the debtor is concealing assets (either on purpose or by honest mistake). Pro se debtors are often placed at the end of the 341 meeting docket and receive "extra attention" from the trustee (never a good thing).

Fourth, a skilled bankruptcy attorney may be reluctant to step into the middle of a pro se case when things go wrong. The case may also degenerate to the point where dismissal or conversion may be the only options.

Bankruptcy cases are being filed in record numbers. The vast majority of bankruptcy cases are processed quickly and efficiently. On the other hand, pro se filings are always red flagged as potential problem cases and receive extra attention - and rightly so! Many of these cases have problems.  Some pro se cases result in loss of property, and others have allegations of bankruptcy fraud. Don't risk your property or your peace of mind. Hire an experienced attorney to guide you safely through the bankruptcy process.

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A person who files a bankruptcy case without an attorney is called a pro se debtor.  “Pro se” is Latin meaning “for oneself;” in other words, you are on your own.  Being on your own during your bankruptcy may save a few upfront dollars, but can cost you plenty in the long run.  There are many negative consequences that are often unexpected and sometimes disastrous. 

The savings pro se debtors receive is minimal and the risk is great.  Attorney fees during bankruptcy are supervised by the United States Bankruptcy Court.  The federal bankruptcy law allows an attorney to collect reasonable compensation for services rendered during a bankruptcy case.  Consequently, bankruptcy attorneys charge similar fees in order to stay competitive, and attorneys must disclose their fee to the bankruptcy court.   

When you are represented by an experienced bankruptcy attorney you receive several benefits.  Your attorney brings years of experience and knowledge in areas including the Federal Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the bankruptcy court’s local rules, federal bankruptcy case law, and state and federal exemption and collection laws.  Your attorney is also familiar with the bankruptcy judge, the bankruptcy trustee, and local creditor practices. 

When you are represented, you will have counsel at the Meeting of Creditors with the bankruptcy trustee.  The trustee assumes that a pro se debtor has made errors in the bankruptcy, and will grill the pro se debtor and scrutinize the bankruptcy case.  When you are represented, your attorney helps you answer any trustee questions, and can file motions and responses via the court’s electronic filing system.  When you are on your own you must mail or personally file documents with the court and must appear before the bankruptcy judge to reaffirm a debt.