Self-Representation Can Leave You Burned in Bankruptcy

self representation

There are many reasons to file for bankruptcy. If you have decided that bankruptcy is the best option for you, you are also faced with the decision of whether or not to hire an attorney to represent you in your bankruptcy. This is not an easy decision to make at a time that it may be very difficult to pay an attorney. However, if you are self-represented in a bankruptcy, whether it be chapter 7 or chapter 13, you are putting yourself at risk of many pitfalls such as a trustee seizing your assets, creditors getting more than they should otherwise, or having your case dismissed. You also may be losing out on receipt of funds from creditors that you otherwise would be entitled to.

Failure to Schedule Assets

In every bankruptcy, the debtor is required to list all of their assets and claims, including real property, personal property and financial assets. Failure to list assets can result in significant consequences such as sanctions imposed by a judge, a creditor objecting to the discharge based upon fraud and in some cases dismissal of your case. As self-represented individual may not be aware of what is considered an asset and what is not, and what is considered a claim and what is not. An experienced bankruptcy attorney will work with you to ensure that all of your assets and claims are properly listed.

Failure to Properly Value Assets

Another important function that a bankruptcy attorney provides is determining a value for the assets that you own. You may think that your old stamp or coin is not worth much, but a trustee may disagree and may attempt to seize and sell it. Another important asset that requires a valuation is a home or other real property. If the home valuation is too high or too low, your home may be at risk of seizure by a Chapter 7 trustee or may require a higher plan payment under a Chapter 13 plan. Steiner Law Group works with our clients to review how real property is titled to place a correct valuation on your home or other real property and explains how the value will affect our clients’ bankruptcy case.

Failure to Properly Use Exemptions

Debtors are allowed to use exemptions to protect some or all of their property in bankruptcy and the improper use of exemptions can have severe effects on a bankruptcy case. Under the Bankruptcy Code, a trustee can object to a claim of exemptions within certain time-frames. Additionally, there are specific rules about which state’s exemptions to use. A self-represented individual may think their property is protected under exemptions, but the property may not, in fact, be protected if improper exemptions are used.

An experienced bankruptcy attorney is familiar with the rules of which exemptions to use and will provide exemption planning to maximize its effectiveness.

Failure to Get a Chapter 13 Plan Confirmed

In Chapter 13 bankruptcy, the Bankruptcy Court must sign a Confirmation Order confirming the debtor’s chapter 13 plan. The Bankruptcy Code has many requirements that must be met before a chapter 13 plan can be confirmed. If a plan cannot meet the confirmation requirements the bankruptcy will typically be dismissed or converted to a Chapter 7. The requirements for confirmation are complex and a self-represented individual who is not familiar with these requirements takes a big risk. For example, if a self-represented individual filed a Chapter 13 bankruptcy to stop a foreclosure and bring arrears current on a home with equity and is not able to get the chapter 13 plan confirmed, the case may be converted to a Chapter 7 and the home may be at risk of seizure and sale by a Chapter 7 trustee.

Failure to Object to Claims in Chapter 13

In a Chapter 13 bankruptcy, creditors must file claims in the case in order to be paid under a Chapter 13 plan. Many times, creditors will file claims that may not be valid, in which case the claims should not be paid under the Chapter 13 plan. A self-represented individual will most likely be unaware of the different bases to object to claims and ultimately may pay more under a Chapter 13 than required.

Not Receiving The Most Benefit From Your Bankruptcy

Many people file for bankruptcy to stop a wage or bank account garnishment or foreclosure. In certain circumstances, some or all of the garnished funds can be recovered and given back to the debtor. For example, if your wages were garnished (in Maryland this is typically 25% of your paycheck), an experienced bankruptcy attorney may be able to get back all of the funds that have been garnished. In this case, self-representation in bankruptcy can actually cost a debtor money that they would otherwise be entitled to.

The decision to hire an attorney for a bankruptcy is not an easy one to make. However, the decision to not hire an attorney may actually cause you to lose more than you would had you hired an attorney. If you have questions about bankruptcy, please call Steiner Law Group.

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About Eric Steiner, Esquire

Mr. Steiner graduated from the University of Michigan Law School in 2006. Since then, he has focused his practice on bankruptcy, real estate, commercial and consumer collections, including representing the third largest lender in the greater Baltimore area.