You don’t have to use a bankruptcy attorney to file for Chapter 7 or Chapter 13 in Utah. The law allows you to file as a pro se debtor, which means that you are representing yourself in the legal proceedings.

However, just because you can do something doesn’t mean you should. Filing for bankruptcy without the advice of a qualified attorney is a daunting task, and handling the matter yourself may not be in your best interest.

Simple Chapter 7 Cases Aren’t So Easy Without a Bankruptcy Attorney

Are you planning to file for Chapter 7 bankruptcy? If yours is a simple case — you own little or no assets, have an income less than the state median and don’t have debts that are likely to be challenged by creditors — you may be able to obtain a discharge without an attorney.

However, even a simple Chapter 7 case will require a significant amount of time and effort on your part. You’ll be expected to be familiar with the U.S. Bankruptcy Code and to follow the rules and procedures of the federal and local courts. In addition, you’ll need to fill out the forms and schedules accurately and completely.

If you make a mistake at any point, you could put your discharge at risk. For that reason, filing for bankruptcy without an attorney is rarely a wise idea.

Complex Chapter 7 Issues May Require Bankruptcy Attorney Assistance

For complicated Chapter 7 cases, hiring a bankruptcy attorney is important, if you hope to achieve the best possible outcome.

If you own a business or a number of assets, have an income above the state median or have creditors that could claim fraud, filing as a pro se debtor comes with several potential risks.

Without a bankruptcy lawyer on your side, for example, your assets could be seized and sold to pay your creditors. Or the courts could dismiss your case. The financial risk is too great for most clients to attempt a complex Chapter 7 bankruptcy on their own.

A Bankruptcy Attorney Is a Must for Most Chapter 13 Cases

Chapter 13 bankruptcies are typically much more complicated and labor-intensive than any Chapter 7 case.

To receive court approval for a Chapter 13 bankruptcy, you’ll need to come up with a creditor repayment plan — a difficult task without an attorney’s extensive knowledge of the law. Trying to cram down (reduce) your car loan or a strip off (recategorize as unsecured debt) a HELOC or second property mortgage as a pro se debtor is extremely difficult, as the additional paperwork is highly complex.

Because of the complexity of filing for Chapter 13 and the long-term legal and financial outcomes that could result, hiring a bankruptcy attorney is always recommended to ensure maximum protection.

The professional legal team at Lewis Adams and Associates offers free consultations to Chapter 7 and Chapter 13 filers in Salt Lake City and throughout northern Utah. Contact our West Jordan office today to schedule a confidential consultation with an experienced bankruptcy attorney.

You may be able to keep your refund — if you plan ahead. To avoid losing your tax refund check, you’ll need to consider the timing of your bankruptcy filing.

Tax Refunds Are Considered Assets in Chapter 7 Bankruptcies

As soon as you file for Chapter 7, most of your assets become part of your bankruptcy estate and are eventually distributed among your creditors.

If your bankruptcy case is filed during tax season, your refund will likely be considered an asset, regardless of whether you’ve received the check yet.

Chapter 7 bankruptcies are based on the property you own, minus any exemptions. Tax refunds are considered property, and in most cases, they are not exempt under Utah law. If you aren’t careful in choosing your filing date, you may be required to turn your tax check over to the bankruptcy trustee.

Timing Your Chapter 7 Bankruptcy to Keep Your Tax Refund

If you don’t want your refund allocated to your bankruptcy creditors, you’ll have to delay filing your Chapter 7 case until after you have received and spent the money.

A word of warning: You can’t simply go out and append the money on frivolous purchases. Buying luxury items before filing for bankruptcy can place your discharge at risk, as it has the appearance of fraud.

Instead, use your refund for necessities. Using this money to pay your mortgage, utility bills, medical costs, food, car maintenance or other living expenses isn’t likely to cause a problem for your Chapter 7 claim.

You can also use these funds to pay your bankruptcy attorney as well as any case-related costs and filing fees.

Tax Refund Considerations for Future Chapter 7 Bankruptcy Filers

If you plan to file for Chapter 7 later in the year, you can avoid this issue with next year’s income tax refund by adjusting your tax withholding now.

The number of allowances you claim on your W-4 determines the amount of federal income tax that is withheld from your paychecks. If you have a high allowance count, the IRS holds more of your money throughout the year. Once you file your tax return, they refund the difference between withholding and your tax liability.

If you lower the amount of your withholding, you’ll keep more of your salary as you earn it, rather than getting a tax refund next year. Be careful not to have too little withheld though, or you could incur an IRS penalty for underpayment.

To determine the appropriate withholding amount in your case, consult with a tax professional and your bankruptcy lawyer.

The experienced bankruptcy attorneys at Lewis Adams & Associates, serving the greater Salt Lake City area, can help you determine your best filing option for your bankruptcy case. To schedule a complimentary consultation to discuss Chapter 7 bankruptcy, contact our West Jordan office today.