Through Twitter, I came across this article “How to File Chapter 13 Bankruptcy Without a Lawyer.” Since I wrote a book about chapter 13 – where I emphasize the need for competent representation – and, since I am also a lawyer, the title alone intrigued me. So I clicked and read the article. Then, I got steamed because not only was the article excruciatingly inaccurate, in some instances it was flat out wrong. So, I’ve copied and pasted each of the “9 Steps,” and offered my response and I grade each answer.
Step 1: “Understand what differentiates Chapter 13 and Chapter 7. Chapter 7 does not require that you make any payments to your creditors, but it does mean that you will lose all of your valuable and nonexempt property, such as a coin or stamp collection, family heirlooms or a second car. Chapter 13 allows you to keep your assets, but you must regularly make payments for three to five years.”
No one can legitimately tell you if you are going to lose property in a chapter 7– or what property you are going to lose and why unless they conduct a thorough exemption analysis. Missing from this is any reference to jurisdiction, length of time the debtor has resided in the jurisdiction, length of time the debtor has resided in a jurisdiction other than the jurisdiction that the debtor resides in now (it sounds confusing, but it really is a consideration). Missing from this is asking the right questions, such as your right to sue someone, or your right to inherit property.
Answer category: D-
Step 2: “Download the forms for Chapter 13 (see Resources). You will need forms that cater to Chapter 13 and forms that refer to all forms of bankruptcy as they are outlined on the U.S. Courts Web site. Print them if you intend to file by paper, but you have the option to file electronically.”
Check with your court. If you’re pro se (i.e., with out a lawyer), you likely cannot file electronically. Also, check your local court’s forms – which you will likely need in addition to the standard forms available from the US Courts site.
Answer category: D
Step 3: “Follow the directions on each form to complete them. Alternatively, you can get a bankruptcy kit that will give you all the forms you need.”
Follow the directions. Read the bankruptcy rules and your local bankruptcy court rules. Go from there.
Answer category: C-
Step 4: “Create a payment plan. This explains your predicted income over the course of three to five years and how you plan to make your monthly or biweekly payments on top of your typical monthly expenses. This plan needs to be approved by the court.”
Read Sections 1322 and 1325 of the Bankruptcy Code and then create your payment plan that the court will actually confirm. After you read that section, you’ll understand that this “step” is woefully over simplified.
Answer grade: F
Step 5: “File your paperwork. If you are filing electronically, you should make sure you save a copy of your paperwork onto your computer for archival purposes. Print them for a hard copy.”
Agreed. Assuming you can file electronically.
Answer grade: C
Step 6: “Contact a credit counselor. You must attend two sessions of credit counseling when you file for Chapter 13 bankruptcy. The first session will consist of a 10-minute phone call. Upon the conclusion of the phone call, you will be provided with a certificate number that you must write down and keep safe.”
Actually, this needs to be done before you file. Two sessions, huh? That’s news to me, and it only takes 10 minutes? My clients tell me it takes about an hour. But unfortunately, since this is step 6, when it should be step 1 or 2, this answer is wrong. And since the case will be dismissed without the certificate, it’s wrong big time.
Answer grade: F, and that’s a BIG F.
Step 7: “Attend a meeting of creditors. This will happen between four and six weeks after you have filed your bankruptcy papers. During the meeting, your court-appointed trustee will ask you questions about your income and your debts. Most of your creditors will likely attend, especially if they do not like the plan that you came up with.”
Most of your creditors will likely attend? Not likely. Most of the time, no creditors attend. For real. Depends on the case – depends on the debtor. Trustee is likely you ask you a lot more questions other than income and expenses.
Answer grade: D-
Step 8: “Attend the second credit counseling meeting. This is an hourlong [sic] session that requires your physical attendance. It will require that you watch a video and take a test afterward. Here, you can pay the necessary fee and obtain your certificate number. You should then receive a letter informing you where you submit your certificate numbers—do this immediately.”
Physical attendance? Does this mean that all of my clients who have gotten theirs online or on the phone need a do-over? No, because this answer is wrong. It’s not called credit counseling – it’s a post-filing course in financial management. We call it “debtor education.”
Answer grade: F
Step 9: “Wait for your approval papers in the mail. Once you receive these, you can begin your payment plan by sending money to the trustee. The trustee can also answer any further questions you may have as they come up.”
Listening to this advice guarantees that the case will be dismissed. Approval papers? What the heck is that? If what we’re referring to is the confirmation order, then that could take months. The first payment is due 30 days after the filing of the plan. See Section 1326.
Answer grade: F
There’s no mention about needing property insurance in chapter 13, or things you might need to think about if you have a 401k, or even a passing reference as to why timing of the filing may be an important element of success. No analysis of issues at all. Just a misleading article that reduces a complex statutory scheme to a bunch of forms and a couple of meetings here and there.
Do it yourself websites are good when you want to know how to trim a bonsai, or perhaps how to replace an air conditioner filter. But chapter 13 offers extraordinary rights and protections. If you think you can do it yourself, you’re flirting with failure. Anyone who tells you otherwise either doesn’t know chapter 13, or wants you to fail.
Related posts:
- Another Road to Failure: How Do I Qualify for Bankruptcy?
- The 401(k) in Chapter 13
- No Ticket? No Discharge: The Ticket Out of Bankruptcy
- Cutting Corners in Chapter 13
- Storm Preparation: Chapter 13 and DSOs
Tags: Chapter 13, Chapter 13 in 13 Chapters, Chapter 13 Trustee, Chapter 7, Debtor Education, Exemptions, Twitter
[...] This post was mentioned on Twitter by Edward Wiest, McLeod Law Offices. McLeod Law Offices said: Followed up on this morning's tweet with a new blog entry: Do It Yourself Chapter 13: The Road to Failure http://bit.ly/cI7TaA [...]
It appears I have to do the Chapter 13 myself. I filed Chap 7 in my NM hometown but that darned trustee is still after me to $10K in my estranged wife’s account at the time that I had nothing to do with; I don’t even sign on her account and didn’t then either.
I’m a contractor trapped in this economy with sporadic income and years of unfiled taxes since the BK.
Any help or words of encouragement?
Thank you for sharing your experiences with our readers. I really have to recommend that you not go it alone. So for an attorney in your area, start here: NACBA. If you’re still hitting a road-block in finding someone who can help you, please contact us by sending a note (check over in the right margin for “Contact Us.”) Be sure you tell me what area you’re in, and hopefully I can point you to resources that may be in your area that may prove helpful.
Hang in there.
-Bill McLeod