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A Do-it-Yourself Guide to Bankruptcy

Erica Sandberg

March 29, 2013

QDear Erica,

I have not been working for many years due to health issues. I am in a huge amount of debt and need to make a decision about bankruptcy. I've been lucky in that my boyfriend had been making all of my payments for me, so I am in good standing in that way, but we've since broken up. Now I have NO money to pay anyone back. I need a lawyer who can help me for free. Is there some sort of free law service that I can contact? — Mandy

AHi Mandy,

Think about the amount of time a typical lawyer puts into his or her education. It takes at least seven years of college and law school. That eats into a good chunk of a young adult's freewheeling lifestyle. Of course they have to pay for it all, too. Unless they're independently wealthy or have a parent who is willing and able to pick up those costs, they'll be financing all or most of it with loans. Many are saddled with student loans totaling in the hundreds of thousands of dollars.Ask Erica

Why go into all this? Because it's the reason that finding a lawyer who will work for nothing but your charming smile and heartfelt appreciation won't be easy.

The fee to work with an attorney who will help you with a Chapter 7 bankruptcy varies by area, but is typically somewhere between $1,000 and $2,500. The lawyer who represents you does a lot for that money, and just as you would expect to be paid for work, so would that person.

Shelling out a grand or more when you can't afford to pay any of your bills may not make much sense, though. If you can't afford attorney fees, some low- and no-cost legal services do exist, and are often provided though law schools. Rutger's University provides pro bono bankruptcy services, as does the University of Minnesota. The participating law students use their pro bono cases to learn about the bankruptcy filing process, and you get free service. Conduct an internet search to see if you can find a similar program near you.

If you can't find a local pro bono service, and can't pay attorney fees, though, you can take on your own case. There is no law that says you can't. Just be aware that it's neither easy nor fast. I'm not trying talk you out of it –but if you really want to DIY bankruptcy, get cracking.

  1. Read all about it. My first suggestion is to get a good book about how to represent yourself in bankruptcy court. Go to your local library and check one out. Make sure it's been published within the past few years, as the eligibility requirements for bankruptcy changed in 2008.
  2. Get certified. To qualify for bankruptcy relief, you are required by federal law to take a U.S. Trustee-approved credit counseling class. Justice.gov is a good place to start, as they list all approved agencies here. After you complete the course, you'll have a certificate necessary to move on to the next step.
  3. Take the means test. To know if you're even able to file for Chapter 7 bankruptcy (the kind where you leave all those pesky unsecured balances behind), you have to prove you can't pay your creditors by filling out a means test form. This and all other bankruptcy forms are available on the U.S. Courts website, here. You are not working and have no income, so that means you'll probably pass the means test.
  4. Complete the Statement of Financial Affairs form. This is where you write down your income (or lack thereof), assets and debts.
  5. Submit all paperwork and pay the filing fee. Even when representing yourself, you'll have to pay a little something — $306 in the case of Chapter 7. At that point the court will assign you a trustee who will oversee your case.
  6. Go to court. First, you'll go to the creditors meeting, a hearing held by your bankruptcy trustee, where you'll be asked, under oath, why you can't pay your debts. Your creditors are allowed to be there, too, but that doesn't mean they'll show up. Assuming there are no complications, this may be the only appearance you have to make. A few months after this meeting, if your bankruptcy filing is approved, you'll receive an official discharge order from the court. In order for the discharge to be finalized, you'll need to take another class on financial management, which you can usually take at the same place you took the credit counseling course.

If all this sounds simple, that's because I've simplified it. Chances are you'll hit some snags. You definitely want this done right, so if you have any doubts about your ability, try to scare up enough cash to pay a real lawyer instead.

Got a question for Erica? Send her an email.