Now don’t get me wrong, there is no substitute for the experience, knowledge, and wisdom of an experienced bankruptcy attorney. But for decades people have been filing out their own bankruptcy petitions, because they can. The forms were not geared for the average person to easily figure out.
On December 1, 2015 the bankruptcy forms are going to change, in a big way. The new forms will make it easier for people to understand and complete their own bankruptcy petitions and I would not be surprised if more people actually filed their own bankruptcy petitions without paying for an attorney.
According to the U.S. Courts, “The revision process drew on the services of a professional forms-design expert, and surveys of bankruptcy petitioners, software vendors, bankruptcy judges and clerks, as well as other members of the bankruptcy community.” Among the most significant changes, individuals and businesses will have different documents for filing bankruptcy. Currently, individuals use the same filing forms as the largest corporations, and must pore through potentially confusing questions not relevant to their cases.
Here is a sample of how major the changes are.
Old Bankruptcy Form
New Bankruptcy Form
The new forms provide a substantial amount of self-help information and instructions. They are written more plainly to help everyone involved to better understand how the forms should be completed. Bankruptcy filing documents for individual debtors will be fillable PDFs, so that users can type information into the documents and save them to file.
The forms even include this general warning which I completely agree with.
The law allows you, as an individual, to represent yourself in bankruptcy court, but you should understand that many people find it extremely difficult to represent themselves successfully. Because bankruptcy has long-term financial and legal consequences, you are strongly urged to hire a qualified attorney.
To be successful, you must correctly file and handle your bankruptcy case. The rules are very technical, and a mistake or inaction may affect your rights. For example, your case may be dismissed because you did not file a required document, pay a fee on time, attend a meeting or hearing, or cooperate with the court, case trustee, U.S. trustee, bankruptcy administrator, or audit firm if your case is selected for audit. If that happens, you could lose your right to file another case, or you may lose protections, including the benefit of the automatic stay.
You must list all your property and debts in the schedules that you are required to file with the court. Even if you plan to pay a particular debt outside of your bankruptcy, you must list that debt in your schedules. If you do not list a debt, the debt may not be discharged. If you do not list property or properly claim it as exempt, you may not be able to keep the property. The judge can also deny you a discharge of all your debts if you do something dishonest in your bankruptcy case, such as destroying or hiding property, falsifying records, or lying. Individual bankruptcy cases are randomly audited to determine if debtors have been accurate, truthful, and complete. Bankruptcy fraud is a serious crime; you could be fined and imprisoned.
If you decide to file without an attorney, the court expects you to follow the rules as if you had hired an attorney. The court will not treat you differently because you are filing for yourself. To be successful, you must be familiar with the United States Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and the local rules of the court in which your case is filed. You must also be familiar with any state exemption laws that apply.
That warning aside, the easier forms will encourage more people to take on the task themselves to save money at a time they don’t have a lot of money.
Maybe the reality is more people will make more mistakes. But according to the committee that put together the new forms, they felt the new forms would make them “easier to read and, as a result, likely to generate more complete and accurate responses.”
The new instruction book for completing the forms is written in plain english as well. You can download the new instructions, here to review but all of the official and final forms will be available here to download for free after December 1, 2015.
If someone can’t afford to file an attorney and decides to file their own bankruptcy, the bankruptcy filing fee is $335 for a Chapter 7 bankruptcy, which the vast majority of people file. This is a mandatory fee charged by the bankruptcy court. However, for those who can’t afford the $335, they can pay it in installments or may qualify to have the fee waived entirely.
If someone decides to pay in installments, they must pay the entire fee within 120 days of filing bankruptcy. Debts will not be discharged until the full fee is paid.
To have the fee waived entirely you must not be able to pay the fee in installments and “The total combined monthly income for your family is less than 150% of the official poverty guideline last published by the U.S. Department of Health and Human Services (DHHS).” At the time of this article the official poverty income numbers can be found here. So if you live in a state other than Alaska or Hawaii and your are an individual and your income is less than $17,500 then you may qualify to file bankruptcy for free by being eligible to have the court fee waived.
That means someone could file bankruptcy for free to make collection calls stop and have their debts discharged in about 90 days. It’s not a process to be taken lightly but for those that decide to take on the risk and issues with filing their own bankruptcy, these easier to read and understand forms will make the process a little less stressful.
If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.