When faced with a foreclosure, most people will consider a Chapter 13 filing. But I have been hearing some rumblings here and there that many people seeking protection under Chapter 13 are opting to go it alone, without an attorney. While certainly people have the right to represent themselves, there is no good reason to not hire an attorney for a Chapter 13.. In an effort to drive my point home, I have identified here the Top Ten Reasons Why You Should Not File Chapter 13 Without an Attorney. I’ve also done so while still hoping to leave a smile on your face.
May we hear a drum roll!
Number 10: The Bankruptcy Code is complicated.
Unless you’re reading it virtually every day, and have studied it for years, understanding the code can be daunting. Since the 2005 changes, it’s been even moreso. Here’s an example: Section 1321 is the easiest section of Chapter 13. It reads “The debtor shall file a plan.” It pretty much goes down hill from there. You’re trying to save your home, not learn a new trade. Find an attorney that knows what they are doing.
Number 9: Other relevant laws are complicated.
A few months ago, I was awaiting for a client’s creditor’s meeting to start. The person ahead of us was representing herself. The trustee asked her “do you have your homestead declaration?” Her response: “what’s a homestead declaration?” It was apparent that she had no idea about the requirements. I silently gasped, I saw the trustee’s eyes close, and deep down, I knew this lady was in a heap of trouble. Had she known, she might have been able to protect her home in bankruptcy – but she didn’t know because she didn’t have an attorney.
Number 8: Form 22C
Bankruptcy attorneys are not fans of Form 22C, but most (hopefully) know how to correctly complete it. There are far more important issues to deal with in a Chapter 13 than to be correcting Form 22C, or to deal with the issues arising from a poorly prepared Form 22C. Oh…and the forms are changing December 1. More fun!
Number 7: Cram downs.
If you have property that is worth less than what is owed, you might benefit from a cram down. It sounds nasty, but it actually isn't....although creditors might not agree with that. There is no way I can articular cram downs thoughtfully and completely without going back on my promise to leave a smile on your face. Actually, the only way I could leave a smile on your face and completely explain cram downs is if my web master figured out a way to have a sound byte of Homer Simpson screaming “BOR-ING!” mid-way through. Then again, you'd probably stop reading it at that point. Want to know how or if a cram down may benefit you? See an attorney.
Number 6: You will have to go to court for your case.
Problems will arise, and you are going to have to go to court. This will result in your taking time off of work. You may even lose some sleep the night before. It also means schlepping to Boston or Worcester which can be a problem if you’re not already there. A lawyer can go for you, and in many situations, you may need to be there.
Number 5: Payments
Plan payments need to be made within 30 days of filing. Don’t make payments and you’ll face a motion to dismiss which will likely require you to go to court (as well as make the payments). And don’t forget adequate protection payments too!
Number 4: Credit Counseling
If you check out the archives, you’ll see that I’ve written about the credit counseling requirement. No attorney worth his fees is going to allow you to file bankruptcy without completing that process.
Number 3: The Bankruptcy Court protects all who do not have an attorney. While you can expect Courts to extend more courtesies than might be extended to attorneys, you cannot expect them to tell you what to do and how to do it. You also cannot expect the Court to let you get away with what no attorney could get away with – such as not filing important documents. That’s not the Court's job, and you cannot and should not expect it.
Number 2: You don’t want to get the case dismissed.
You cannot say to yourself – “ok, I’ll try it myself…and then if it goes badly, I’ll get an attorney.” Not such a good idea. Under the new and supposedly improved Bankruptcy Code, debtors who have had a case pending within a year prior to filing are now dubbed “repeat filers.” Being a repeat filer can adversely affect the automatic stay in a later case. That stay protects debtors from creditors – and in the case of real estate, stops a foreclosure right in its tracks. This can mean more work and bigger headaches in a later filing. Make it easy for yourself: avoid being a repeat filer.
And the Number 1 Reason Why You Should Have an Attorney in a Chapter 13: Attorneys fees can be paid through a Chapter 13 plan.
Even if you do not have cash stored up for attorneys fees, you can still hire an attorney. And the fees can get paid through your Chapter 13 plan. Check with your attorney to see if they will wait to get paid by the Chapter 13 Trustee. If they cannot or won’t, find one who will.
Still think you cannot afford a good attorney? Think again.
