Should You File Your Own Bankruptcy?
A popular bankruptcy-related internet search is: “Can I file bankruptcy on my own?” The short answer is yes. Filing bankruptcy without the help of an attorney is allowed and is called a pro se filing.
However, filing pro se is a really bad idea. Unless you’re familiar with your local bankruptcy court’s practices, the Bankruptcy Code, and the Federal Rules of Bankruptcy Procedure, you may find yourself in more trouble than you were before you filed. Here are just a few of the questions you’ll need to answer if you file a seemingly “routine” case:
- How do you calculate your current monthly income as defined by the Code?
- Is your annualized income above or below the median for your household size in your state?
- What sources of income are required to be included in the calculation?
- Do you need to complete the means test?
- How do you complete the means test?
- Do you understand the differences and applications of the means test form for Chapter 7 and Chapter 13?
- Do you know the advantages of filing one Chapter or another?
- Do you understand what the different panel trustees expect in your district?
- What assets do you need to disclose in your schedules?
- Do you have exemptions available to protect your assets?
- What information needs to go on the Statement of Financial Affairs?
- What about assets in other peoples’ names paid for by you?
- Do you understand what a preference is? What about a fraudulent transfer?
Pro se filers routinely get these questions wrong. For example, I recently sat through a pro se 341 meeting while waiting for my clients’ case to be called. The debtor was attending her second or third meeting (most debtors with attorneys only have to attend one meeting) because her filed papers had omitted many assets, sources of income, and other information. After the panel trustee questioned her about the omissions, an Assistant U.S. Trustee began asking if the debtor was aware that she had signed the papers under penalty of perjury. Her testimony at the meeting differed from the information in the filed petition and schedules. The debtor was in tears as she tried to explain herself. It was unclear whether she was upset because she’d been caught lying or because she realized she was in over her head. I couldn’t tell if she was intentionally trying to conceal assets and income or if she simply made a bunch of honest mistakes. Regardless, she was at risk of being denied a discharge or having her case dismissed.
This particular debtor may call an attorney to help get her out of this mess. Even if she finds someone to help, it’s likely going to cost her more than if she’d hired an attorney in the first place. I explain it to my clients like this: I could probably do some home repairs myself and save some money. But as my wife will tell you, I’m almost certainly going to break something. I’ll end up spending extra to hire a professional to not only do the job right, but to repair whatever I messed up. As any bankruptcy attorney will tell you, it’s easier (and less expensive) to file a case properly from the start than to fix a train wreck.
If filing bankruptcy were simply a matter of filling out some forms, I’d recommend people save some money and do it themselves. But it’s a complicated process with a lot of traps for the unwary, and the consequences of a sloppy or negligent filing can be severe. If you’re considering filing for bankruptcy, speak with a local bankruptcy attorney. The risks associated with going it alone aren’t worth the few bucks you’ll save.
Postscript: Thank you to Bret Nason for this post. I have taken over many pro se filings in my career as well. I have never seen a pro se filing done correctly. Bret is a consumer bankruptcy attorney working in Platteville, Wisconsin and a proud member of the National Association of Consumer Bankruptcy Attorneys.