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4 reasons to hire a bankruptcy attorney

Dear Bankruptcy Adviser,
How hard is it to file on your own? I really can't afford an attorney and need to file, are there any particular things I should know? Some of my bills are outstanding for 15 or 20 years and they are taking me to court, but I don't even know what I owe from the past. I have an idea of which creditors but not account numbers.
--Diana

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Dear Diana,
I understand that money's tight, Diana, and that you are trying to save every penny. I believe that you will save far more money in the long run if you hire an attorney to handle your bankruptcy. Now you might be thinking, "Hey, this guy's a bankruptcy attorney. Of course he'll tell me that I need him." In fact, I hope you are thinking like this; sensible caution indicates a healthy desire to protect yourself. So here's my argument for why hiring a bankruptcy attorney is truly worth it.

Protection from creditor harassment: Once you have informed your creditors (for example, collection agencies) that you have retained counsel, by law they can still contact you. They should be informed that you have hired an attorney and then told to call his or her office. However, a good attorney will call any harassing collectors and make an attempt to get the calls to stop. This saves you time and the money you'd otherwise spend on headache medicine.

Protection from uncertainty: There are many ins and outs of a bankruptcy petition. There are communications from the court, from the trustees who review your case and even from creditors. Navigating these waters can be stressful, especially because you don't know how your actions will affect whether your discharge is granted. Your attorney will know exactly how to proceed, however, and when he or she says, "Everything's on schedule, you're going to be OK," you can believe it. This also saves you time and the money you'd be spending on anxiety medicine.

Protection from what you don't know: We each do the best we can with the information we've got. If you file on your own, you're functioning with a lot less information. For example, you mentioned in your question that some of your debt is at least 15 years old. An attorney will tell you that the statute of limitations has likely run out on this debt. This saves you money. Period.

Protection from mistakes: It's not always so easy to fill out the paperwork correctly. For example, many people think that if they want to keep their car that they should not include it on the petition. This will likely result in a dismissed case. There are ways to protect a car, but it must be listed correctly, with the proper information in the proper place. This also saves you time (an attorney will do the paperwork quickly but it could take you hours) and will also save you the money you'd otherwise have to spend on another car.

In conclusion, Diana, the bankruptcy laws are changing in significant ways in the next week and so has the paperwork. Filling out the forms accurately and completely is essential to a successful petition. Anything less and your case may be dismissed -- and that's not how you save money.

Justin Harelik is a practicing bankruptcy lawyer in the Los Angeles office of Price Law Group. To ask a question of the Bankruptcy Adviser go to the "Ask the Experts" page, and select "bankruptcy" as the topic.

Bankrate.com's corrections policy
-- Posted: Oct. 11, 2005
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