Bankruptcy Lawyer. If you are having financial difficulties, bankruptcy may be the best course of action. Due to the legal aspects of filing for bankruptcy, it can be challenging to navigate the process alone.
You can file the case without legal help, known as going pro se, though experts recommend hiring a bankruptcy lawyer to handle your case.
Bankruptcy Lawyer
Bankruptcy lawyers specialize in helping their clients use the court system to reduce or eliminate debts, file for bankruptcy, or seek unpaid debts. They can work with individuals or with businesses, representing debtors, creditors, creditors’ committees, or bankruptcy trustees.
Bankruptcy lawyers work in and out of the courtroom, either creating debt restructuring plans for debtors to help them relieve debts or trying to extract as much owed money as possible from debtors on behalf of creditors.
Types of Personal Bankruptcy
When you are filing as an individual, there are two main types of bankruptcy.
Chapter 7
The most commonly chosen option, a Chapter 7 bankruptcy is also known as a liquidation, though this is not quite accurate. According to debt.org, almost 96% of Chapter 7 filings are considered no-asset cases. This means that the filer, either an individual or a business, doesn’t have enough equity for a court-appointed trustee to seize and sell off (liquidated) to pay creditors, and will therefore likely keep their property.
Chapter 7 bankruptcies typically take between 4-6 months, but after that time, filers will usually have all but some of their unsecured debt discharged. Debts that remain include alimony and child support, property liens, some taxes, and (usually) their student debt. There’s an eight-year waiting period between Chapter 7 bankruptcy filings, and it can stay on your credit report for up to 10 years after discharge.
Chapter 13
Also known as a reorganization, a Chapter 13 bankruptcy filing stops foreclosures or repossessions so that debtors can enter a court-mandated debt repayment plan for (typically) 3-5 years. That plan will include back payments and paying off at least some of their insecure debt, but it will allow them to keep their home or car.
Once the repayment plan period is over, all remaining unsecured debt might be discharged. This type of bankruptcy is meant for people with reliable incomes or sole proprietors and represents a little less than 30% of bankruptcy cases. A Chapter 13 filing can stay on your report for up to 7 years after discharge.
Types Of Business Bankruptcies
These are the most common types of business bankruptcies, but there are also others, such as Chapters 9, 12, and 15.
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Chapter 13
For sole proprietor businesses, this takes the form of a small business repayment plan. The amount that must be repaid depends on the business’ income, how much it owes, and the value of its property.
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Chapter 7
A business that must close down and is underwater with debt obligations can file for a Chapter 7 bankruptcy, surrendering all assets for liquidation by a court-appointed trustee. Once the process is complete, creditors are paid to whatever extent is possible. Unless owners make themselves personally responsible for any debt, they are free and clear.
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Chapter 11
This type of bankruptcy buys a business time to reorganize its operations, assets, and debts while protecting it from creditors. Chapter 11 filings increased during the beginning of the COVID-19 pandemic in 2020, as many businesses had to shut down.
What Does a Bankruptcy Attorney Do?
Due to the complexity of bankruptcy law, some lawyers focus their practice on bankruptcy. For personal bankruptcy, you are not required by law to have legal representation. However, the smart thing to do in complex situations is to get professional help.
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Ensure You Get the Most Out of Bankruptcy Meetings
All bankruptcy proceedings require meetings that you must attend, for example, the creditors meeting. The meetings are conducted by a trustee who is assigned by the court to your case. At the creditors’ meeting, your creditors (or their attorneys) will ask you (or your attorney) about your financial situation. You might be asked if you have read and signed your bankruptcy petition or if you have disclosed all your creditors, debts, and assets.
At the end of the meeting, the trustee decides if the meeting has been completed or if it needs to be continued at a later date. A good attorney ensures that nothing is overlooked in these meetings and that your rights are protected. Good legal representation also makes it less likely that you will have to appear later in bankruptcy court.
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Discharge And Recovery
The attorney’s responsibility is to make sure all follow-ups and discharges are complete. Discharge means that you are legally released from the liability of your debt after the bankruptcy proceedings. The recovery process means helping identify the causes of your bankruptcy and how to avoid problems in the future. A good bankruptcy attorney can help arrange education about establishing smart financial habits and reestablishing your credit score.
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Paperwork
A bankruptcy lawyer helps with the filing of papers and forms. If just one form is overlooked, your case could be dismissed. The forms for Chapter 7 and Chapter 13 are not the same, and there are other forms called schedules that define your property, income, and expenses. A form regarding your current financial affairs must also be filled out.
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Navigate Complex Legal Matters
Bankruptcy law is complex. A good lawyer can help you understand the language associated with the proceedings. Each bankruptcy situation requires careful consideration; for example, is it better to file for Chapter 7 or Chapter 13? Each district court also has its own set of rules and regulations that must be understood and honored.
A reliable lawyer will advise you on how to avoid fraud or the hiding or destruction of property. None of these tactics are necessary since there are proper legal methods for you to get back on your feet.
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Representing You at Court Hearings
A lawyer will be your advocate at any court-mandated hearings or when dealing with creditors. A bankruptcy judge will usually hold discovery hearings to assess your current financial situation and identify the types of debts you have. The court will use this information when determining which debts to discharge.
As part of assessing your case, the court will hold a meeting of creditors that allows debt collectors to enter evidence that challenges your bankruptcy claims. Creditors may attempt to dispute the amount you owe or make arguments against having their debt discharged. Your lawyer will defend your interests during these hearings to ensure that as little debt remains as possible.
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Tracking Down Records
Part of the bankruptcy lawyer’s job is to find and organize all the necessary financial records. Many people worry about missing paperwork, but a good lawyer can hunt it all down and present it properly. This process will help you avoid a creditor requesting a 2004(a) examination, which is a more detailed examination of your financial situation. These requests are sometimes made when a creditor believes that something is being hidden or that not all assets have been claimed.
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Stress Relief
One of the most important jobs of the bankruptcy lawyer is to put the client’s mind at ease. With a reliable lawyer, your questions are answered, you receive guidance, and you entrust the bankruptcy process to experienced hands. Your lawyer can also help set up credit counseling to help you avoid future financial problems.
Reasons You May Need a Bankruptcy Lawyer
Filing for bankruptcy can stay on your credit report for seven to ten years, depending on the type of bankruptcy. Therefore, it’s important to consider hiring a bankruptcy lawyer. Here are three reasons you may need one:
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You’re Tired of Hearing from Debt Collectors.
If debt collectors are constantly bugging you, a bankruptcy lawyer can deal with them instead. Once you tell a debt collector that a lawyer presents you, the collector is supposed to communicate with the lawyer, not you.
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You’re Uncomfortable Dealing with The Bankruptcy Case on Your Own
It can be intimidating to represent yourself in court, and a bankruptcy lawyer can handle legal matters on your behalf.
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You’re Worried About the Paperwork
Court cases typically involve a lot of documents. If you incorrectly fill out paperwork or turn it in past the deadline, for instance, it could endanger your bankruptcy case. A bankruptcy lawyer can keep the paperwork on track, including any documents (like credit card bills) that you must submit.
Conclusion
A bankruptcy attorney should be readily available when you have questions or need consultation as you navigate the process. Bankruptcy can be a challenging, confusing experience, but a good attorney can bring a measure of clarity and comfort and help ensure that it serves its chief purpose—helping you regain your financial footing.
FAQs
How To Find a Bankruptcy Lawyer
If you decide to hire a bankruptcy lawyer to handle your case, you’ll want to pick one who’s reputable and qualified. Here are some ways to find a trustworthy bankruptcy lawyer:
. Ask trusted relatives, friends, or co-workers for recommendations.
. Contact a lawyer for referral services.
. Search the website of the National Association of Consumer Bankruptcy Lawyers.
. Check with your state or local bar association.
How Long Does a Bankruptcy Stay on Your Credit Report?
A Chapter 7 bankruptcy can stay on your credit report for up to 10 years, while a Chapter 13 bankruptcy may remain on your credit report for up to seven years.
Can I Get Free Help with My Bankruptcy Case?
Yes, nonprofit legal services offer help to low-income people who either need a lawyer to represent them in a bankruptcy case or are handling a bankruptcy case independently.
