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Why you may need help with your bankruptcy
An attorney will prepare the bankruptcy petition, schedules, statement of financial affairs, statement of intentions, means test, statement, and other forms. These papers are usually thought of as the bankruptcy case, and in many cases these are the only papers the client actually sees and signs.
In reality, this is only the start of a bankruptcy case. The originating papers are financial disclosure mandated by federal law.
The job of effectuating the clients needs in bankruptcy is another matter. In many situations the client may need judicial and purchase money lien avoidance, defense on creditor lift stay actions, defense on creditor complaints, negotiation with the bankruptcy trustee among other matters. If all one does is file the originating bankruptcy papers with the court and attend the 341 hearing, in many situations the outcome will be a very poorly represented client.
Understanding lien avoidance requires a thorough knowledge of the Uniform Commercial Code, as well as State and Federal Laws outside of the bankruptcy code. The key to lien avoidance is a complex set of laws set out in UCC article nine regarding perfection and priority of liens
The bankruptcy code refers to purchase money security interests, which is in turn defined by the Uniform Commercial Code. Did you know that a home mortgage is not a "purchase money security interest"? In effect a home mortgage is an undefined debt under the UCC. A purchase money security interest may also be invalid for general boiler plate descriptions of collateral. Security interests involving certificates of title are also undefined, and excepted from the UCC definition of a security interest. The effect of establishing an unperfected or undefined lien is the difference between the client keeping a car or house or other secured collateral post discharge.
The avoidance of liens whether judicial, or unperfected purchase money or statutory are matters that must be raised with in the bankruptcy case itself by affirmative action on your behalf or on the part of the trustee. An attorney can certainly submit list of liens to the trustee to be avoided.
Another area where attorney representation is paramount is in defense of creditor lift stay actions. If the creditor fails to obtain a lift stay order prior to the close of the case, the stay becomes a permanent injunction. The consequence of a judge granting a lift stay motion is that you could lose your house or your car. There are many technical and equitable defenses to a lift stay action by a creditor that an experienced attorney should know. The debtors need for the property in question as part the necessary clause is only a small part of available defenses. To date, our office has won every single lift stay action brought against a client that wasn't settled with a conditional order.
Because of the vast complexity of bankruptcy law, you should have a lawyer with experience in the field. Although a person always has the right to represent themselves in a case, this is not recommended in bankruptcy. In fact it's even less wise to represent yourself in a bankruptcy case than it is in a divorce, child custody, or criminal matter.
A person proceeding pro-se in their own case generally has no recourse for mistakes that they may make. For example in a criminal case, if an attorney fails to call a material witness to the witness stand, or otherwise makes an error in judgment affecting the outcome of the case, the defendant can usually have the verdict overturned for ineffective assistance of counsel. On the other hand there is no such relief for someone who waives the right to counsel and represents themselves. The constitutional right to effective assistance of counsel was waived when the defendant chose to proceed pro-se.
The filing of a chapter 7 bankruptcy is an irrevocable decision. You can't voluntarily dismiss your chapter 7 after it is filed. If you have non-exempt property or don't know the correct exemption for exempt property it would be taken and sold to pay your creditors. Losing a house, a car, income property or family heirlooms could result from an uninformed decision to file, or improper self representation.
Another likely consequence of self representation , is you won't comply with motion practice necessary to clear away liens on property and your bankruptcy will be un-avoided liens after the case closes, that could result in repossession or foreclosure.
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