Filing bankruptcy is a complicated process. In fact, it’s complicated before you even start because you have to make some initial decisions about whom will represent you. Here are your four options:
1. Represent Yourself
As in most legal proceedings, a party is entitled to represent his own interests in a bankruptcy. This is called pro se or pro per representation. Some people are successful in doing a bankruptcy this way if they do not have a complicated case and if they have the time and ability to research the law and procedure for bankruptcy. However, even in a successful pro se case, the debtor often misses subtle items that could ultimately cost them more time and money than they would have spent on a lawyer. And, if the case begins to unravel, you will end up seeking out a lawyer and probably paying more than you would have if you had started out with a lawyer in the first place.
Pros: Low initial cost (just the $299 filing fee), learn about legal system, sense of accomplishment
Cons: Risk, potential high long term costs, anxiety of not knowing the process
2. Hire a Petition Preparer
These are bankruptcy paralegals or bankruptcy legal assistants who just help you prepare the paperwork for a bankruptcy, but cannot give you legal advice or represent you in the bankruptcy. You still have to sign everything and take the liability for the accuracy of the paperwork. Because you did not prepare the paperwork, you may not even know if it’s correct.
Use of these services rarely turns out well for a debtor. They have most of the disadvantages of representing yourself without many advantages. One of the big petition preparation services in Arizona called “Why Hire a Lawyer?” has been under constant scrutiny from the Arizona Bar Association, the Department of Justice, and the Bankruptcy Community. I have worked with many former clients of petition preparation services like this one who end up needing a lawyer to clean up the mess the service made. Again, you will likely end up seeking out a lawyer and probably paying more than you would have if you had started out with a lawyer in the first place.
Pros: Affordable initial cost ($500-$800 including filing fee), some help with complicated bankruptcy forms
Cons: Many disreputable services around, cannot represent you in your case (you’ll be on your own at the Meeting of Creditors and any Court Hearings).
3. Hire a Big Firm
You know the type, you’ve seen the commercials… and billboards… and yellow page ads…
These firms do well because they blanket Arizona with marketing. They are referred to as “volume practices” by those who appreciate them and “bankruptcy mills” by those who don’t. The costs are at the very top of the fee range because these firms have to pay for all their marketing, staff, and buildings.
I will tell you that many times I have been at a Meeting of Creditors for one of my Bankruptcy clients, and seen a big firm lawyer show up and try to find her clients by asking everyone around the room because she’s never met her own clients before. By that time in the bankruptcy process, I have already spent two months or more working with my clients and getting to know their situation, their concerns, and their needs.
Pros: Competent representation
Cons: Minimal personal interaction with actual attorney, high cost
4. Hire a Solo Practitioner or Small Firm
A Solo Practitioner is a single attorney practicing on his or her own, perhaps with a legal assistant or paralegal. Small Firms have a few attorneys and an assistant or two. These firms provide a high level of legal services to their clients on face to face basis. Since their client base is smaller, these attorneys spend more time on each case and more time getting to know each client. To someone facing a Bankruptcy, having an attorney that takes the time to truly understand the client’s situation and takes the time to carefully explain the process is an invaluable service.
In addition to the personal touch and quality legal service, Solo Practitioners and Small Firms have low overhead costs which allow for smaller legal fees to the client. Lower fees usually do not indicate lesser service, just lesser overhead costs.
Pros: Competent representation, lower fees, personal interaction with the attorney, peace of mind
Cons: What cons? :)