Bankruptcy is a process that allows individuals and businesses to eliminate or reduce unsecured debt. It is also used to dispose of assets such as second homes, vehicles, and valuable family heirlooms up to a certain value.
Filing for bankruptcy is a complex process that requires careful and thorough preparation of documents and paperwork. This is where hiring a bankruptcy attorney makes all the difference.
What is Bankruptcy?
Bankruptcy is a legal process that allows a person or business to get out from under debts that have become so large they can’t pay them. When a person or business files for bankruptcy, a judge and court trustee review their assets and liabilities to see if the debts can be discharged or wiped out.
The process can be confusing and difficult to understand, but it can also be a lifesaver if the person or business faces severe financial difficulties. The first step is to seek an experienced attorney who can explain the bankruptcy laws and help you make the best decision possible for your unique situation.
There are many different reasons why a person or business may need to file for bankruptcy. Poor financial decisions, job loss, unexpected emergencies, and even natural disasters can all lead to the filing of a bankruptcy case.
When a person or business files for bankruptcy, they usually have no way of paying off their debts and don’t have any assets to pay them off. However, the law allows a person or business to liquidate qualifying property as a way to repay part of their debts.
Once the bankruptcy is filed, a trustee takes over and notifies creditors that the person or business has filed for bankruptcy. This prevents most creditors from contacting the person or business about their debts and limits them from trying to take over the person’s assets.
In some cases, the person or business may retain some assets and work out a payment plan with their creditors to repay their debts over time. This is called a Chapter 13 bankruptcy.
Another option is to get some help from a qualified financial counselor. These are free and available in every state and territory and can help you decide the best course of action for your financial situation.
If you need a lawyer to help you understand the bankruptcy laws and file for bankruptcy, you can contact your local bar association or search online for a qualified attorney. You can also go pro se, which means filing for bankruptcy on your own without a lawyer. You will need to compile financial records and provide them to the court. This will give you and anyone else helping you a better understanding of your finances.
Filing for Bankruptcy
Bankruptcy is filed by individuals and businesses who owe large amounts of debt they cannot repay. This may include a mortgage, credit card bills, auto loans, or student loan payments.
A bankruptcy lawyer can help you decide if you need to file for bankruptcy and can advise you about your options, and assist you with the filing process. They also can help you prepare your paperwork, review your financial situation, and work with you to determine a repayment plan for your creditors that will allow you to eliminate some or all of your debts.
Filing for bankruptcy is a big decision; hiring an experienced attorney can make the experience less stressful. It can help you get a better chance at a successful outcome and prevent problems that could arise later.
You should not try to file for bankruptcy on your own unless you are extremely familiar with the laws in your state and the local court system. Many courts have procedures that can be difficult to understand, and you need someone knowledgeable about your specific case to guide you through the process.
An experienced bankruptcy lawyer will explain the different forms and how to fill them out correctly. They will also guide you through filing other documents, including a statement of financial affairs and schedules that list your assets and liabilities.
The main advantage of hiring an attorney is that they will be able to protect your rights at all stages of the bankruptcy process. They can represent you at any court hearings that need to be scheduled and will ensure that you follow all legal deadlines.
Once you file for bankruptcy, you must attend a meeting with your creditors, known as the “341 Meeting.” This is an opportunity for your creditors to ask questions about your case. During this meeting, the bankruptcy trustee will also ask you questions.
After your bankruptcy case is filed, you must begin to make payments to the court-appointed trustee. The trustee will disburse these payments to your creditors.
Discharge of Debts in Bankruptcy
The goal of bankruptcy is to help debtors get a fresh start and begin to rebuild their financial future. Depending on the type of bankruptcy filed, some debts will be addressed through a payment plan or paid off through the liquidation of non-exempt assets.
The bankruptcy court grants a discharge when certain requirements are met, and the procedures are followed. This can take a few months or longer, depending on the type of bankruptcy.
Once a discharge is issued, creditors and debt collectors can no longer contact the debtor. They are also prohibited from collecting discharged debts unless the debtor gives them written permission. If a creditor or debt collector violates the discharge, the bankruptcy court may sanction them with civil contempt and fine them for their violation of the order.
Bankruptcy can be helpful for many people, but it is not for everyone. It is best to speak with a bankruptcy lawyer before you file a bankruptcy petition or make any decision about filing.
Even though you are no longer personally liable for discharged debts, valid liens (a charge on the property to secure debt) may still remain after bankruptcy. However, tax and judgment liens associated with discharged debts are generally not enforceable after the case is closed.
Discharges do not affect other types of debt, such as child support and alimony. Other non-dischargeable debts can include recent taxes and certain unsecured debts resulting from misconduct, like a fraudulent account or intentional personal injury.
In most cases, discharges are granted about four months after the case is filed. Some cases are discharged sooner, especially if the debtor completes all payments under a Chapter 13 repayment plan or doesn’t file any additional objections.
After a discharge is granted, the debtor receives an official copy of the discharge order in the mail from the court clerk. This notice includes a list of all the creditors involved in the case andthe trustee and debtor’s lawyer. If you lose or misplace your discharge order, the clerk can provide another copy for a fee.
Representation in Bankruptcy Court
If you are an individual or business needing bankruptcy counsel, you should seek a firm with a proven record of success. According to the American Bankruptcy Institute, in 2017, 91.5 percent of bankruptcy cases were successfully represented by lawyers, compared with just 66.7% of bankruptcy cases where individuals representing themselves succeeded.
You should also select a firm that can provide counsel for your case throughout the entire process. For example, if you are a debtor who has a plan that will involve liquidating assets, the attorney must be able to guide you through a wide variety of legal motions and other issues that may arise.
A bankruptcy lawyer can also assist you in protecting your assets during the bankruptcy proceeding. For example, many statutes allow a bankruptcy trustee to set aside certain transactions that occurred before the debtor filed for bankruptcy protection. In addition, “fraudulent transfer” statutes allow a bankruptcy trustee to sue relatives if you give them your assets before filing for bankruptcy.
Finally, a bankruptcy lawyer can represent your case on appeal to the district courts, bankruptcy appellate panels, and circuit courts of appeal. Our firm’s Bankruptcy Litigation Team draws from all our interdisciplinary practice groups to serve our bankruptcy clients. This means that you will have the same experienced attorneys engaged in your bankruptcy matter as it makes its way through the appellate process, ensuring that we remain committed to resolving your issue and preserving all of your hard-earned facts.
In addition, we can also assist you with conflict searches that reveal that one or more non-debtor pre-existing clients of your firm are parties in interest in the bankruptcy case but are being represented by other firms. This information is critical in determining whether a consent request should be made from those pre-existing clients and at what point.
It’s interesting how consulting an attorney can give you a game plan for recovering your financial status while dealing with debt. My colleague is interested in helping his uncle after he lost his job during the pandemic. Maybe we should find a bankruptcy services expert that can help him in the future.