The majority of individuals who file bankruptcy hire a bankruptcy attorney to help them through the process and ensure that they receive the full benefit of the bankruptcy relief sought.

Believe it or not, bankruptcy is one of the most common legal proceedings in the United States. Every year hundreds of thousands of bankruptcies are filed, including more than ten thousand bankruptcies filed here in Arizona.

Do you really need a bankruptcy lawyer?

Bankruptcy lawyers are asked this question all the time. It may sound like a copout but the truth is “it depends.” It depends on the type of bankruptcy, the complexity of the case, and the filer’s tolerance for extreme technicality.

Nationally, about ten percent of bankruptcies are filed without an attorney. Most of these are “simple” chapter 7 cases where the debtor does not have a mortgage, automobile loan, or other secured debts. Secured debts are debts where the debtor promises property as collateral if the debt is not repaid. Besides home mortgages and automobiles, an electronics or furniture store credit card might be a secured debt.

The significance of secured debts is that they must be paid or the collateral must be surrendered to the creditor. Some creditors will ask debtors to sign reaffirmation agreements. These agreements essentially renew the debt to survive the bankruptcy and if the debtor defaults after the bankruptcy, the debtor can be sued for the deficiency balance. Reaffirmation is often contrary to the debtor’s best interest.

Another consideration for debtors who file bankruptcy without an attorney is correct application of personal property exemptions. Earlier this week at a 341 meeting of creditors, we saw an unrepresented debtor denied discharge because she used the wrong property exemptions. She will have to incur additional fees to amend her bankruptcy petition and start the process over again. Her debts would be discharged already if she hired a bankruptcy lawyer.

Even in the simplest chapter 7 bankruptcies, the debtor must be certain he/she accurately completed all necessary paperwork and provided detailed information about income, expenses, property, and all liabilities. Mistakes can cause the petition to be dismissed entirely or, perhaps worse, involuntarily converted to a chapter 13 bankruptcy. According to one retired bankruptcy judge, about 25 percent of all bankruptcies filed without an attorney are dismissed.

This is why the vast majority of bankruptcy filers in Arizona hire a bankruptcy lawyer. Last year more than 80 percent of all bankruptcies filed in Arizona were filed by bankruptcy lawyers.

How to choose a bankruptcy lawyer

There are literally hundreds of bankruptcy lawyers in Phoenix and the surrounding cities. You probably see some advertising on city buses or television commercials. Those firms devote an enormous amount of money to their marketing campaigns and these costs must be recouped from their clients.

Bankruptcy law firms that depend on very high client volume are sometimes called “bankruptcy mills.” This term is not meant to disparage the volume practices, but one of the downsides of extreme volume is that it leaves very little time for personal attention. It may cause these firms to delegate most of their clients’ cases to paralegals and other non-lawyer support staff. Sometimes this can make attorney-client communication more difficult.

Many solo practices and small firms cater to the personalized experience. These practices may feel less like an assembly line and offer greater access to your bankruptcy lawyer.

The process to find the bankruptcy lawyer for you should begin with a free consultation. This is an opportunity for you not only to have your bankruptcy questions answered, but also to interview the law firm. Do not be afraid to ask questions about the firm and its policies.

Ask if the person who provides the initial consultation will be your bankruptcy lawyer. If the answer is no, it can feel impersonal to be blindly assigned to another attorney and it can jeopardize the continuity of your representation. Many bankruptcy law firms use staff specialized in aggressive sales tactics to handle the initial consultation. This can be a red flag because candidly bankruptcy is not always the best decision for everyone.

You should also ask about the firm’s communication policies. The best bankruptcy lawyers understand how important it is to timely respond to all client questions and concerns. Bankruptcy is difficult enough without waiting several days (or more) for a response from your lawyer.

Call for a free consultation