Do I need an attorney to file for bankruptcy?

The short answer is yes!  Don’t try to file a bankruptcy without one!

Your attorney will know the law first and foremost.  The attorney will know if you have too much property or income for instance as he will do a means test calculation for you as is required by the law.  I recently came in on a bankruptcy case where a bankruptcy filer should never have filed a case because this person had non-exempt income or assets.

The trustee just claimed all of those assets for the creditors as they will do when there are assets available to seize.  If an experienced bankruptcy attorney would have been consulted in the beginning then they could have advised the client not to file for bankruptcy at all in that case.

The client could have saved the filing fee, attorney’s fees, administrative fees and they could have worked out a deal to pay the debts back.  As it turned out the client had to surrender assets necessary to pay all of these costs and he had to pay the debts back in full.  It would have been much cheaper not to file bankruptcy in the first place and to make matters worse the clients assets were tied up for over a year.

Secondly you need an attorney because the attorney will know the bankruptcy procedures.  Filing for bankruptcy requires many procedural steps which are difficult for the novice to comply with.  An attorney will file the case electronically with special bankruptcy software that automatically complies with the procedural requirements of the court.  I have seen many filers in 341 hearings who didn’t know what they were doing so they made serious errors.  These errors usually result in delays and continuances and sometimes in dismissals of the bankruptcy case.

If the case is dismissed then the debts come back into play and the whole reason for filing is negated.  Now you have lost the filing fee and you will suffer other penalties like losing the automatic stay for a year.

Thirdly you need an attorney because if you hire one you should get an expert who knows the law,and  the procedure but also someone who knows the trustees.  Each bankruptcy trustee is a little different and each has slightly different requirements.  An experienced attorney will know what each one needs and what each one likes to receive in terms of supporting documentation.  This will inevitably help you through the process in the smoothest and quickest fashion.

Lastly with an attorney you get someone to accompany you through the process.  I accompany all of my clients to the 341 meeting of creditors and I am available for any questions that they might have about the process at any time.  This helps people to have fewer fears and worries about something that people naturally are very scared about.

So there are many reasons to hire an experienced bankruptcy attorney to help with your bankruptcy.  Remember too that the attorney is the only one that can represent you in court in the unlikely event that things go badly.  So if you are considering bankruptcy then hire an attorney and don’t do it yourself!

I practice bankruptcy law in San Diego California.  Please visit my website for more information on filing bankruptcy at: www.farquharlaw.com.

Is filing for bankruptcy the “responsible” thing to do?

(See my blog about bankruptcy and the bible).

I would argue that yes it usually is not just smart to file for bankruptcy if your debts have gone beyond your ability to pay but that it is also the responsible thing to do.  That is because bankruptcy gives you and you creditors finality and it puts you on the road to good credit as you can now re-build our credit score and become a more productive person.

Many people ask me this question about responsiblity because they seem to think that filing bankruptcy and discharging your debts is somehow not honoring their promise to pay for the debts that they have incurred.  They feel that they are being irresponsible and dishonorable.

I remind them that debts have a creeping quality that can slowly accumulate and take over all of your available resources until there is nothing left to pay your ongoing bills.  This can happen insidiously without your noticing and with out you intending for it to happen.  It is just a miscalculation on your part but one that can lead to disaster if left unchecked.

Also it is true that your financial situation can change where you income is cut by a job loss or just a loss of hours at work.  There can be divorce, sickness, a new baby, an accident or a business downturn or any of a whole host of reasons why you cannot honor your debts like you originally intended.  These intervening circumstances can cause your financial situation to become critical in a hurry like a nuclear meltdown.  One day you find that you can’t afford to buy groceries but the phone is ringing fifty times a day from some collection agent who is trying to get you to promise to pay money that you don’t have.  It’s not responsible to let this situation continue.

So it is not irresponsibility that usually leads a person to need a bankruptcy.  It is just the facts of life with its ups and downs and twists and turns.   It is also true that we are human and therefore inherently imperfect.  We make mistakes all the time.  We can’t predict the future but we are naturally optimistic about it.  We always expect things to turn out well but that expectation is not always realistic.  When things don’t turn out well some may need bankruptcy.

Now I would argue that if your finances get far out of hand and your ability to pay your debts is not there then it is time to throw in the towel and do the responsible thing.  Admit that you were wrong.  I have done it personally many times in my life.  Once you admit that then you can notify your creditors that you are choosing the legal, moral, right, and responsible thing which is filing bankruptcy.  You are notifying them that you will not be paying their debts back.  The creditors will go away and stop bothering you for debts you cannot pay and they will move on to someone else and use your bad debt as a tax write-off.

Now you can re-build your credit score.  With that you can once again get financed to so you can buy things like a car and a house if you choose to.  Your score will be better on average three years after bankruptcy and a fresh start than if you choose to try to pay those old debts back because on average most people will fail to do so.

So do the responsible thing.  File bankruptcy.

I am a bankruptcy attorney practicing bankruptcy law in San Diego, CA.  Please visit my websites for further information on bankruptcy at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office to speak to me about any bankruptcy issue for free at (619) 702-5015.

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.