Bankruptcy cases can become very complicated, requiring significant attention to detail while following the rules set by the courts. The complexity of bankruptcy laws can make it very easy for debtors without attorneys to make mistakes. In some cases, common mistakes can have significant consequences.
- Failing to provide your trustee with required documentation can result in extra hearings or case dismissal. During a bankruptcy, you are assigned a trustee who will review your petition and other required documents. Trustees will ask for information extending back six months, and it is up to debtors to be thorough and not leave out important financial documents.
- Debtors filing for bankruptcy are required to take credit counseling and debtor education courses. Failing to take these courses can result in case dismissal.
- Without an attorney, debtors are at risk of filing under the wrong bankruptcy chapter. Depending on the circumstances of borrowers, the benefits of Chapter 7, 11 or 13 bankruptcy can vary. For example, a debtor with many important assets might fare better under Chapter 13 bankruptcy.
- Debtors may be unaware of how exemptions work, which can result in losing assets or receiving a less favorable Chapter 13 repayment plan. Exemptions can vary based on the state where bankruptcy is filed.
Attorneys Can Help Avoid Catastrophic Bankruptcy Mistakes
Although these errors are common for individuals without a bankruptcy attorney, they are not a comprehensive list of all possible mistakes. Debtors will be held to the same standards as an attorney with decades of experience, and are expected to know the rules and procedures required by the bankruptcy court. Mistakes can break cases, and filing for bankruptcy without an attorney is extremely risky.