Do It Yourself Bankruptcy: Can You Save Money Or Is It Better to Hire A Lawyer?

By: Robert A. Coffman|LRL Editor

It carries a great social stigma, and most would avoid it at all costs, but bankruptcy is a fact of life that some people unavoidably face. What if your wife or husband filed for divorce and the court ordered you to pay your spouse's attorney fees, alimony, and child support? Maybe your business slowed down due to a nationwide financial crisis and now all of your investors and bank lenders are knocking on your door demanding for payment. When you start to feel the pressure of all your financial woes with no other alternatives to resolve them, then it might be a good idea to consider a do it yourself bankruptcy filing.

The main advantage of a do it yourself bankruptcy filing can be reduced to one factor: savings. Many people who choose this option lack the funds to afford even a bankruptcy attorney. Perhaps you are one. But if you can afford an attorney, a do it yourself bankruptcy filing may not be the best option. First, bankruptcy laws are complex, and bankruptcy attorneys are specialized in this area to represent your best interests. Secondly, it is less time-consuming to allow an attorney to manage your case.

If you still want to file for bankruptcy yourself, then be sure to learn the basic information regarding the process and the laws involved. Understand the advantages and disadvantages of filing for a bankruptcy and its different forms. One advantage is that the debtor is relieved of any legal liability to pay discharged debts. On the other hand, a bankruptcy can be a major impairment on your credit, making it difficult to obtain lending for many years.

There are two types of bankruptcy you should consider. The first one is called Chapter 7 bankruptcy. In Chapter 7, you liquidate all your assets, from your real estate properties, to your cars and jewelries. The total amount will be given to the trustee appointed by the court who, in turn, will divide the amount to all of your creditors.

The second type is called Chapter 13 and it is thought to be more complex between the two. With this option, you reorganize all your debts and arrange for a repayment plan that should also be agreed upon by your creditors. The span of time can be as long as five years. In order to arrange your repayment schedule, evaluate all of your monthly income and expenses.

Overall, even though you can save money with a do it yourself bankruptcy filing, it may be better to hire a lawyer to help you with the process- if you can afford one.

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