PRO SE BANKRUPTCY FILINGS INCREASE IN THE SOUTHERN DISTRICT OF GEORGIA

PRO SE BANKRUPTCY FILINGS INCREASE IN THE SOUTHERN DISTRICT OF GEORGIA

Since the beginning of 2018, our firm has noticed a significant increase in the number of pro se bankruptcy cases.  Unfortunately, many of these cases are dismissed within the first 60 days for failure to adhere to the filing requirements imposed by the bankruptcy code. This would include failure to obtain pre-bankruptcy credit counseling, as well as nonpayment of the filing fee. Additionally, many pro se cases are filed with errors in the schedules or with incomplete schedules, which will also lead to dismissal.  So the question asked by many attorneys in the Augusta area is why would a debtor file a pro se case, given the high risk of dismissal?

 

After investigation of some of these cases, there appears to be several common themes. Most pro se Chapter 13 cases  are filed on the eve of foreclosure of the debtor’s residence. Foreclosure day in Georgia is on the first Tuesday of every month, and the majority of Chapter 13 filings occur within the last week of the month, as bankruptcy attorneys are filing Chapter 13 petitions to halt the foreclosure  and protect the debtor’s homes. Unfortunately, some debtors may attempt loan modifications  prior to the foreclosure date, only to be advised in the few days before the sale that the loan modification has been denied. In that instance, those homeowners may not have the time or opportunity to meet with a bankruptcy attorney insufficient time to prepare and file a petition which would stop the foreclosure. So out of necessity, those debtors will file a pro se Chapter 13 petition.

 

However, an increasing number of pro se Chapter 13 petitions are filed by homeowners who have been contacted by a third-party who claims to offer foreclosure rescue or loan modification services. The homeowners are contacted directly, usually with a solicitation which references the legal advertisements for the pending foreclosure of the homeowners’ residence. These firms research the legal ads, and will mail, phone or even text the homeowners with offers for their “foreclosure prevention” services.  Given the limited amount of time between when the legal ads run, and when the foreclosure takes place, the opportunity for meaningful loan modification discussions is improbable, if not impossible. So as a negotiation/stalling tactic, these foreclosure prevention firms will recommend that the homeowner file a pro se Chapter 13 case to stop the foreclosure, which will then buy time for the firm to negotiate a loan modification. Unfortunately, the homeowners are often given unrealistic expectations as far as what loan modification options will be available, based on their income and expenses.

 

While a pro se Chapter 13 filing will stop a Georgia foreclosure under either of the above circumstances, if the filing requirements are not met, then the case will usually be dismissed with prejudice.  A dismissal with prejudice means that the debtor is no longer under the protection of the Bankruptcy Court, and may not seek relief in the Bankruptcy Court for a minimum of 180 days. This means that if loan modification attempts are unsuccessful, the homeowner will not be able to seek bankruptcy protection again in order to propose a court supervised Chapter 13 plan which would allow for repayment of the delinquency on the mortgage. Because Georgia is a non– judicial foreclosure state, it is very easy for the mortgage lender to resume and conclude the foreclosure process within the 180 day prejudice period for a dismissed pro se debtor.

 

There has also been an increase in the filing a pro se Chapter 7 petitions. Unlike Chapter 13 cases, the Chapter 7 petitions are not being file to stop a foreclosure. Usually, pro se Chapter 7 cases are filed to stop a lawsuit or wage garnishment. However, these petitions are inevitably prepared via the Internet, where financial information is shared with a website that offers bankruptcy petition services. However, a bankruptcy preparation website, unlike a bankruptcy attorney, is prohibited from providing legal advice. As a result, Chapter 7 debtors who file a pro se bankruptcy petition via a bankruptcy support website are not counseled on exempting property or the handling of secured debts that they wished to keep, such as an automobile or home.  And while the Bankruptcy Code does allow for petitions to be prepared by a bankruptcy petition preparer, they are required to disclose their information on the bankruptcy petition. Be very wary of somebody who offers bankruptcy petition preparation assistance, but is not willing to disclose their identity on those documents.

 

Our firm offers a free bankruptcy consultation to consumers in the various counties that we serve. If you are faced with a foreclosure, lawsuit or wage garnishment, it would certainly make sense to schedule a consultation so that your legal rights can be discussed, and bankruptcy options proposed.  Otherwise, you could risk the loss of the very assets that you seek to protect.