Why Nothing Good Comes from Pro Se Bankruptcy Filings
I have been a personal bankruptcy lawyer in Atlanta for more than 30 years and one of the trends that I have seen over all these years has been that personal bankruptcy is more complicated and confusing now than it is ever been in the past.
Back in 1988, for example, I would often see pro se (people who filed bankruptcy without a lawyer) appearing at 341 hearings and Chapter 13 confirmation hearings. At that time, a pro se filer could head over to Office Depot and buy Chapter 7 or Chapter 13 forms, fill them out with a pen, make copies and stand in line with everyone else to file a case.
In those days, there was no online access to the Clerk of Courts office and everyone – lawyers and non-lawyers – would have to stand in long lines with 5 or 6 copies of bankruptcy petitions and wait for the clerk to hand stamp each copy.
Bankruptcy schedules in 1988 were fairly straightforward and other than figuring out how to declare the right exemptions to protect property, a reasonably intelligent person could muddle through a Chapter 7 case. Chapter 13 cases were problematic for pro se filers even in the 1980’s but occasionally a friendly trustee would take the time to help a non-lawyer navigate the waters of Chapter 13.
Bankruptcy in 2018 – Complex and Complicated
Fast forward to 2018 and I think that a pro se filer has little to no chance at successfully completing either a Chapter 7 or Chapter 13 case without guidance from an experienced lawyer.
Earlier this week, I volunteered at a program sponsored by the Georgia State College of Law in Atlanta where I was available to pro se bankruptcy filers to answer general bankruptcy questions. Another local bankruptcy lawyer was there as well. We had several folks stop by and every person we spoke to had a huge mess on their hands.
No one understood how bankruptcy exemptions worked and every pro se filer either overstated their permitted exemption, used the wrong statute or failed to declare any asset as exempt at all.
One gentleman I spoke with had filed a Chapter 7 to stop a foreclosure and had just appeared at Motion for Relief from Stay where the judge lifted the automatic stay to allow a state foreclosure proceeding to commence. In case you were not aware, Chapter 7 is not the right bankruptcy choice for someone trying to save a home – this gentlemen should have filed a Chapter 13 to set up a repayment plan.
I am not blaming these folks for not knowing what to do – I would fare no better trying to complete a complicated tax return or fill out immigration paperwork. My point is that these men and women who came to ask for help were trying to understand a very non-intuitive area of law that requires knowledge of federal and state statutes and knowledge of local rules of practice.
The individuals who came to the pro se clinic at least had some idea that they needed help. For every person who stopped by there are 100 more who neither understand what to do, nor do they know what they do not know.
Risks for Pro Se Filers
Bankruptcy schedules for both Chapter 7 and Chapter 13 have become lengthier and more complex. The clerk requires cases to be filed electronically (the Clerk in Atlanta has a scanner at the clerk’s office for pro se filers to use). Information online is plentiful but not necessarily accurate or up to date. For example, as I write this blog post in June, 2018, a search of “Georgia bankruptcy exemptions” includes a link to Justia, a respected legal publisher, and an outdated version of the Georgia exemption statute. If you relied on this version of the exemption statute you would conclude that you can only protect $10,000 of equity in real estate. In fact, Georgia law now allows you to protect $21,500 of equity.
Another very real risk to filing pro se is that some decisions in bankruptcy cannot be “undone.” For example, if you own or have ownership interest in a house worth $100,000 that is not encumbered by any debt, and you file Chapter 7 in Georgia, your case would show significant non-exempt equity. The Chapter 7 trustee would seize that non-exempt equity and force a sale of your house and there is nothing you could do to dismiss your case. This is an extreme example but one that does happen, and there are other serious consequences of starting a bankruptcy case without understanding all the implications of filing.
Is it fair to struggling consumers that filing bankruptcy has become so complicated and confusing? No, it is not fair at all. I understand why a person with no money would balk at spending close to $2,000 to file Chapter 7.
Unfortunately, however, you do not really have any good options other than hiring a lawyer to help you file bankruptcy. Filing bankruptcy on your own without a lawyer will inevitably create more problems than you could ever expect.