Michigan Attorney Blog

Why Does My Bankruptcy Lawyer Need So Much Documentation?

Be Aware: Bankruptcy Requires a Little Homework …

bankruptcy lawyer need so much documentation

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Why Do You Need All of This Stuff?”

This is one of the most common questions bankruptcy attorneys receive from their clients. “Why do you need the recorded title for my house?” “Why do you need 6 months’ worth of my pay-stubs?” “Why do you need the canceled check from that jalopy I sold to some guy 18 months ago?”

These are logical questions from clients who are considering a legal option, bankruptcy, the necessity and need for which arises from the most stressful conditions possible: divorce, widowing, foreclosure, paycheck garnishment, all of the conditions which compel people to seek the advice of a bankruptcy lawyer. When people make the decision to go forward and to file a Chapter 7 or Chapter 13 bankruptcy, it is never an easy decision.

The last thing that they want to hear once they have made that tough choice is that they need to take the time to amass 27 pounds of paper and documentation for the lawyer who they likely assumed would “take care of it” for them.

Unfortunately, the drafting of a good, accurate, and complication-proof bankruptcy petition (the document that is filed with the Bankruptcy Court in order to start a bankruptcy process) requires a lot of effort from you, at least initially.

The reasons are both practical and also statutory.

The Practical Reasons Why a Bankruptcy Lawyer Needs So Much Documentation

The practical reason why we bankruptcy attorneys ask you for a laundry list of documentation and other stuff is that we not only want to but need to get it right.

It is a common bankruptcy myth that a bankruptcy (especially Chapter 7 bankruptcy) is just a matter of form-filling that anyone can do, with or without an attorney. A Chapter 7 or Chapter 13 bankruptcy can and usually does present significant challenges and dangers to your income, your assets, and even your family-members and friends if not done properly with a deep understanding not only of the process but of the laws, rules, and judicial decisions governing the bankruptcy process.

An experienced bankruptcy attorney such as attorney John Hilla of The Hilla Law Firm, PLLC spends an enormous amount of time keeping abreast of the evolution of bankruptcy law, of new case decisions, of new local and Federal rules, of the basic administrative processes and preferences (which vary widely) of every local Chapter 7 and Chapter 13 Trustee.

Your attorney understands what is required up front from you to ensure that your case is as “complete” as possible before the petition is ever filed. In an “easy” Chapter 7 case (if such a thing ever really exists), for example, you should not need to worry about anything after the petition is filed other than showing up for your 341 Meeting of Creditors hearing and completing one more online debtor education course.

Your bankruptcy should feel easy to you, but your attorney needs help from you and information from you to get the petition drafted in a full, complete, accurate, legally defensive manner as possible. We do not know what you have, what you’ve done, who you’ve given money to or not, or other things about you unless you tell us.

In addition, legal ethical guidelines require attorneys representing debtors in bankruptcy to engage in “due diligence” regarding the information in your bankruptcy petition. We are simply not allowed to just take your word for it in all instances. We must, for example, review your credit reports, vehicle and home titles or deeds, and other documentation to ensure that the information in the bankruptcy petitions to which we attach our names and reputations as well is truth and accurate.

The Statutory or Legal Reasons Why a Bankruptcy Lawyer Needs So Much Documentation

Your bankruptcy attorney is also (and sometimes primarily) requesting a lot of documentation from you because the Bankruptcy Code (the Federal statute governing the bankruptcy process in the United States) and local court rules and administrative orders require bankruptcy lawyers to provide the information directly to the Chapter 7 or Chapter 13 Trustee assigned to your case after filing, before your first 341 Meeting of Creditors hearing.

Why must that documentation be turned over? Because, although you are Constitutionally and under Federal law entitled to relief from your dischargeable debts, you can lose that entitlement if you have engaged in certain acts of fraud or “bad faith,” such as the concealing of or fraudulent transfer of cash or other personal assets prior to filing the bankruptcy case.

The Trustees thus need to verify that the information in your petition is accurate and that you have not failed to include any information that the Code and rules require including. Your bank statements will be scrutinized for unusual transactions; your vehicle and land-title records will be searched; your income history reviewed; your household expenses will be under scrutiny.

When you file a Chapter 7 or Chapter 13 bankruptcy, the filing will be a publicly available document, and you give up a certain entitlement to freedom from scrutiny.

“It’s none of your business” is the sort of response you can give to a bankruptcy or US Trustee asking for your personal records that will lose you your discharge and potentially put you into the cross-hairs for Federal criminal charges for bankruptcy fraud.

Why Does my Bankruptcy Lawyer Need So Much Documentation? The Bottom Line

The bottom line as to why your bankruptcy lawyer needs so much documentation is because we need it. There is an old axiom among attorneys that an attorney can’t care about a case more than the client does. A Chapter 7 or Chapter 13 bankruptcy by its very nature requires a lot of disclosure of assets, expenses, income, and financial transactions of various sorts.

Be prepared when you meet with a bankruptcy lawyer to be informed that, when you sign the retainer agreement and hire that attorney, that you will be told that you need to participate fully in the preparation of your bankruptcy petition.

Your lawyer is asking you for stuff because he or she knows what is needed for success—and that is what you are paying for.  

If you are a Michigan resident and would like to explore your options for a Chapter 7 or Chapter 13 bankruptcy with an experienced Michigan bankruptcy attorney, please contact us at (866) 674-2317 or click the button below to schedule a free, initial consultation.

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