Filing bankruptcy without an attorney for people who own their own home is a big misstep. There are many reasons why you would want an experienced bankruptcy attorney to assist and guide you through your case whether you are a homeowner or not, but homeowners should be especially wary as they have a lot to lose.
A Chapter 7 case is often referred to as a liquidation case, and that is because the Chapter 7 Trustee has the power to sell real property, and personal property. The Chapter 7 Trustee can hire a broker to sell your real property, market it, and sign the sale documents. Also, a Chapter 7 case once filed cannot be voluntarily dismissed. This can be a lethal combination – if you find yourself in an improperly filed Chapter 7 you may not be able to stop the train once the Trustee moves to sell your property.
To add to the pain of the improperly filed Chapter 7 is that you (the debtor) are required to pay for the Chapter 7 Trustee’s time, their attorney’s time, and any other people they hire, such as a broker or real estate agent. The attorney that the Chapter 7 Trustee employs usually has astronomical fees that can range up to $800 an hour. If the Trustee is selling your real property then the fees will be taken out of the proceeds from the sale.
I have been hired multiple times in the past to help distressed homeowners convert to a Chapter 13 to stop the sale of their home after they had improperly filed a Chapter 7 by themselves, with a paralegal, or with an inexperienced attorney. It is possible to stop the sale in some situations, but this is fact driven and varies for each person. If the person is successful in converting their case to a Chapter 13 they will still be required to pay for any time expended by the Trustee and their professionals, and there will be the added expense of the attorney’s fees to convert the case.
If this individual had consulted with an experienced bankruptcy attorney in the first place the cost of the bankruptcy would have been much lower and the outcome would be better.