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Do I need an attorney to file bankruptcy


 That may be surprising to hear from an attorney, especially a bankruptcy attorney, but the truth is you can file a bankruptcy petition if you know what you are doing and understand the law.

However, in almost every circumstance where someone tries to represent themselves in bankruptcy proceedings, usually there is a problem.   The most important part about filing a bankruptcy is the accuracy of the petition. The bankruptcy court runs entirely on a premise that debtors voluntarily provide truthful and accurate answers to the questions posed in the petition. A typical bankruptcy petition is about 45 pages in length. There are a complex amount of calculations and questions that must be completed. For instance, question 10(a) of the Statement of Financial Affairs asks:             List all other property, other than property transferred in the ordinary course of   the business or financial affairs of the debtor, transferred either absolutely or as security within 2 years immediately preceding the commencement of this case.   What does that question even mean? Most of my clients answer it incorrectly. But essentially, the Court wants to know the details of anything you have sold or given away within 2 years of filing the case. If you traded in your car for another car within 2 years, this needs to be disclosed here. So do the items you sold at a garage sale last summer.

Here is another example. Question 3(a) of the Statement of Financial Affairs Asks:                   a. Individual or joint debtor(s) with primarily consumer debts:  List all payments on loans, installment purchases of goods or services, and other debts to any creditor made within 90 days immediately preceding the commencement of this case unless the aggregate value of all property that constitutes or is affected by such transfer is less than $600. Indicate any payments that were made to a creditor on account of a domestic support obligation or as  part of an alternative repayment schedule under a plan by an approved nonprofit budgeting and creditor counseling agency.

Almost all of my clients say they have not repaid any creditors.. However, what about the car loan you have? Or the mortgage.. Those debts and payments have to be disclosed.   Equally important to answering the questions correctly (which requires you to actually understand the questions.. a task many clients with lawyers have a hard time even getting right), the big "gotch ya" in Virginia is the complex and archaic way you have to protect your assets in Virginia. Part of your bankruptcy petition is listing your income, expenses, assets and debts. But a VERY big part is protecting the things you own. The way you protect the assets you have is to claim "exemptions" of the things you own. Failing to claim your assets as exempt can result in the bankruptcy trustee filing an objection to your exemptions as illustrated below..

Before we start, I have never spoken to Ms. Mallory-Motamore, however everything I will write about comes from the Bankrutpcy Court's public access to case records.   Ms. Mallory-Moltamore filed bankruptcy in 2012 under Ch 7. She did so representing herself pro se, or without a lawyer. In the completion of her schedules, the debtor claimed as exempt about $1500 of cash in her bank account under 34-4 of the Code of Virginia, which otherwise is perfectly legal to do (In Virginia, one can claim a lifetime exemption of $5000 in cash assets plus $500 per dependent). However, in Virginia protecting exemptions requires the filing of a homestead deed within a time period after filing. Ms. Mallory-Moltamore obviously did not do that, and the trustee was able to strip her exemption off.. Net result, she lost the entire $1500 in cash. Here is the trustees objection:  docs/exemptions.pdf and the judge's order sustaining the objection: docs/order on exemptions.pdf.  Now one would think that the Court would give a pro se debtor a break in such a situation right? WRONG. Absolutely wrong. There are deadlines to prefect exemptions. If you are a day late, you might as well have not even tried. When you represent yourself, you are held to the same standard as if you are represented by counsel.   It gets worse...   Through the course of the case, the trustee found more assets that were not disclosed by the debtor nor protected properly under Virginia law.. The net result, the trustee recovered in excess of $3100 from Ms. Mallory-Moltamore.  docs/tfr.pdf   In hind site, Ms. Mallory-Moltamore paid $3100 to represent herself in a Chapter 7 bankruptcy rather than simply paying an experienced bankruptcy attorney $1000 to handle her case. All of her assets recovered by the trustee were protectable under Virginia law had they been properly disclosed and exempted correctly.  I bet she wishes she had hired an attorney and paid the attorney $1000 to handle the case correctly.. Had she of, she would have $2100 more in her pocket.   The above case is not unusual. I attend meetings of creditors often and see pro se debtors fumbling at the hearing. The trustees work on commission, meaning they take a percentage of what they recover for creditors. There job is to maximize assets for creditors. They are not mean people. They simply are doing their jobs. No fault to them, and if I were a creditor I would hope they would be turning over every stone of the debtors financial affairs looking for assets and so would you.   The bottom line is this.. Yes you can represent yourself in a bankruptcy proceeding. However, the small costs you will save may (and usually does) cost you in the long run. 

I have been practicing bankruptcy law since 1999. Before then I worked for a bankruptcy attorney for 3 years as a law student. I have a decade and a half of bankruptcy experience that will guide you through the process, protect your assets and properly disclose your financial affairs to the Court. Is that worth a $1000? Well, if you are still asking yourself that question, lets call Ms. Mallory-Moltamore up.   Timothy Anderson 757-301-3636

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