Having a company go bankrupt is one of the most stressful things that could happen to a person. It is a time when you already do not have money, so hiring a good lawyer for your case might not be something that you could afford. What can you do in such a situation?
Well, you always have the option to file for bankruptcy without a lawyer. How should you go about it and what can you do to win the case in your favour? If these questions are bothering you, then you have come to the right place!
Remember that people in the court would have far more knowledge about things than you do. Therefore, give this article a thorough read to know what you should do before you head to the court.
Let’s dive in!
What is Pro Se?
It is not necessary for you to file for a bankruptcy with the help of a lawyer. You always have the choice to go ahead with the filing process without hiring a lawyer. This process is also known as pro se which means that you are representing yourself.
Should You File for Bankruptcy Without a Lawyer?
Every year, there are numerous people who end up being bankrupt so much that they don’t even have the money to pay off their debts, let alone afford a lawyer to file for bankruptcy. It’s no news that a lawyer would charge a hefty amount of money which you probably don’t have. However, lawyers are still pretty important. So, the question then arises, should you file for bankruptcy without a lawyer? Do you need to, and is it even worth it?
Whether you need or do not need a lawyer mainly depends on how complicated your case is. You could file for bankruptcy without a lawyer if you do not own a huge business or have a lot of money.
However, while this could save you a lot of money, you need to look into all the possibilities on a serious note and see if you can take on this charge or no. It requires excellent management skills as you would have to organize all of your financial documentation, file an immense amount of paperwork in a timely manner, and contact the trustee who deals with your bankruptcy. And this is just the tip of the ice. You would also have to understand the federal laws in detail.
Because you would be new to law, you’d have to work twice as much as a lawyer would. If you are willing to push yourself to this extent, and if you are confident that you’d take the courthouse by force, then go for it!
What Happens When You File for Bankruptcy?
You are able to get an automatic stay the moment you file for bankruptcy. The stay results in a block on your debt which prevents the creditors from continuing to collect money from you. Therefore, while you are granted a stay, the creditors cannot garnish your wages, cut down money from your bank account, or go after any personal assets and belongings.
Having a stay is a positive step. This is because it gives you enough time to deal with the court and also with your creditors in order to figure out the next steps in this entire ordeal.
Steps to Follow When You File for Bankruptcy
It can be really hard to deal with bankruptcy. Your entire world is falling apart. However, you need to be strong and determined to prove your case. Therefore, you must follow the given steps when you file for bankruptcy:
Find Out If Your Salary Meets the Means Test
The first step to filing a bankruptcy involves a certain test. This is known as the ‘Means Test’. The Means Test is carried out to find out whether you are suited to file for bankruptcy or not.
The test form is provided by the national government. However, you can also find it online (note that the online tests might not be very detailed).
Once, you have acquired the test form, you have to start filling it out. You will see that the form requires you to answer a few basic questions like your monthly salary and the number of individuals in your family. Moreover the form also asks you about your debts and assets. The reason to ask this is to see if these debts can be liquidated or not.
It would be quite easy for you to deal with this entire ordeal if your salary is lower than your state’s average or if you have not been blamed for extortion. Moreover, having a few assets would also prove to be in your favor.
Get Your Credit Card Reports Together with Full Credit Counselling
Once the Means Test has been conducted, you are expected to acquire credit reports from all three credit agencies. You might be wondering as to why you need a report from all three bureaus? The reason for this is because usually most creditors do not report to all the agencies. Therefore, if due to any such reason you are unable to report a debt, it won’t be liquidated in bankruptcy.
After this, you have to finish a credit counseling and financial literacy course. You will find these courses online and even in the U.S. Trustee Program.
Complete All The Paperwork Needed
Completing the official bankruptcy form is typically the most difficult lengthy part of the entire process especially if you opt to file bankruptcy pro se. The difficulty is because a lot of detailed and complex questions are often asked.
To make life easy, you can download the forms package to relieve yourself of a little stress and to save some time. These packages are quite affordable and include all the forms you may require to file for bankruptcy in your region.
After finishing the forms, attach the required documents and send the paperwork. In addition to this, also provide the filing fee by mail or either in person. It is of paramount importance that you quickly reply to any mail received from the bankruptcy trustee. If you do not reply to these mails promptly, your case might not be approved.
Be Present at Creditor Meetings
The next step is to attend a “Meeting of Creditors” on the decided date and time. Even though your creditors will not be there, the trustee will be present and will ask you a couple of basic questions regarding your case. Remember to answer these questions correctly and honestly.
Complete The Personal Financial Management Instruction Course
Once you are done with all the previous steps, you must finish a Personal Financial Management Instruction Course. This is a post-filing course that you are expected to complete in 45 days after meeting with creditors. The U.S. Trustee Program’s website will have an approved course for your state.
After this, you only have to sit and wait to get an answer from the bankruptcy court to know whether your debts have been liquidated or not.
Types of Bankruptcies
When filing for a bankruptcy, it is important to know what sort of a bankruptcy you qualify for. There are six different types of bankruptcies as given below:
Liquidation
This is the most common type of bankruptcy where the trustee overlooks the sale and/or liquidation of any valuable thing that you own in order to pay your creditors. In addition to this, any remaining debts (e.g. credit cards) are also forgiven. However, liquidation bankruptcy does not deal with other debts like student loans and/or taxes.
You can only file for a liquidation bankruptcy after the court decides that your salary is not enough to pay your debts. This can be found out through the Means Test mentioned earlier.
Repayment Plan
In the repayment plan, the court provides you with a monthly payment plan. This plan usually spans over a period of three to five years depending on your assets and income. The schedule is given so that you can pay back a fraction of your unsecured and all of your secured debt.
The amount that you have to pay monthly is based on your salary and how much debt you have acquired over the years. However, despite giving you a chance to pay everything off, the court also confines you to a strict budget and overlooks all your spending.
Large Reorganization
As the name suggests, this bankruptcy option reorganizes and completely rearranges your business or company. Businesses decide up on a plan as to how they will still function while paying their debts. In order to go forward with this type of bankruptcy, both the court and the creditors should accept the plan.
Family Farmers
This is a reimbursement and restitution plan that grants family farmers and fishermen to refrain from selling their belongings or expropriate on their property.
Used In Foreign Cases
This type of bankruptcy deals with international cases.
Municipalities
This is also a restitution plan that grants schools, towns, and cities the leverage to revamp themselves and pay back the debts that they owe.
Conclusion
Now you know about everything regarding how to apply for bankruptcy without a lawyer. Follow all the steps that you just read about and you are good to go. You can now head to the court with a confident stride knowing that the case will be in your favor.
