Bankruptcy refers to the federally-governed legal process in which a person or entity’s debts are discharged, making them no longer liable for those debts. The exact bankruptcy process will vary based on several factors, such as which type of bankruptcy is being filed, and what debts cannot be discharged.
The bankruptcy process is meant to act as a sort of clean slate for those facing financial difficulties. It is often the best but last resort option after they have explored other options, such as negotiating with their creditors and seeking out credit counseling services. However, it is not without consequence, and is not always available to those who are considering filing.
Some examples of the most common reasons a person will file for bankruptcy include, but is not limited to:
- Long term financial issues;
- Long term unemployment;
- Significant debts have been incurred, such as those related to healthcare;
- Wages are being garnished;
- Paying for one credit card with another;
- Paying for necessities with credit cards;
- Paying bills from retirement accounts; or
- Working multiple jobs, and still financially overextended.
What Should I Consider Before Filing For Bankruptcy?
Before deciding to proceed with filing for bankruptcy, there are many pros and cons you should take into consideration. Again, while there are consequences to filing, bankruptcy may provide the financial relief you need to begin again and reestablish your credit.
Some pros to filing for bankruptcy may include:
- An automatic stay in which creditors are stopped from taking action such as debt collection and repossession;
- Potential stop to eviction, utilities shut off, etc;
- Potential for your credit to improve;
- Access to financial counseling that may otherwise be difficult to obtain; and
- The ability to hold on to certain assets, and the ability to make some repayments in smaller, more manageable amounts.
Some cons to filing for bankruptcy may include:
- The stigma attached to filing;
- The fact that the bankruptcy can appear on your credit report for up to ten years, which may deter other
- creditors from working with you;
- Property not included under bankruptcy exemptions may be sold in order to repay your creditors;
- Many credit card companies automatically cancel your accounts when they are notified that you have filed for bankruptcy;
- Bankruptcies are public filings, meaning they become public knowledge; and
- Some employers will not hire employees who have filed for bankruptcy.
What Questions Should I Expect During a Meeting With a Bankruptcy Lawyer?
If you have decided to move forward with filing for bankruptcy, it would be in your best interests to retain a bankruptcy attorney. The attorney can help you determine your best move, and can represent you throughout the bankruptcy process. Before meeting, you should prepare for your appointment as much as possible to make the most of your time together.
In order to best understand your claim, the lawyer will need accurate and detailed information. Although every lawyer has their own interview process, there are some questions that are commonly asked during such initial meetings.
Common questions include:
- Has a Debt Collector Sued You? Being served with a debt collection lawsuit requires prompt attention. Failure to respond and assert a legal defense in a timely manner could result in the court issuing a judgment against you. It is important to note that some, but not all, judgments may be discharged through bankruptcy. Your bankruptcy attorney will need to know if you have pending judgments or wage garnishment orders. You should bring all debt-related documents with you, so the attorney can determine which will be relevant to creating your case;
- Are You Facing Foreclosure and/or Eviction? Foreclosure and eviction are two other related issues that require immediate attention. As such, if you are facing either of these, you should tell your attorney as soon as possible. Bring any related documentation to the meeting, as your attorney may be able to provide you with advice regarding how to delay or entirely avoid the loss of your home;
- What Specific Types of Debt Do You Owe? Depending on the specific types of debt that you owe, the bankruptcy lawyer’s recommendations and strategy will vary. A Chapter 7 bankruptcy does not cancel all types of debt, including child support and student loans. If you have significant debts that cannot be cancelled by a Chapter 7 bankruptcy, your attorney may suggest that you file under Chapter 13 instead. Your first appointment will most likely be a detailed discussion of all of your debts. Again, you should bring copies of any bills, mortgage statements, and other debt-related documents as this information will help the bankruptcy lawyer tailor their recommendations to your needs; and
- What Assets and Income Do You Have? It is imperative that you disclose all of you and your immediate family’s assets and income to the bankruptcy lawyer. In order to be eligible for a Chapter 7 bankruptcy, you must meet a financial means test. Certain assets including vehicles, real estate, and other valuable property may help determine which form of bankruptcy is right for you. While it is possible to exempt certain property from a Chapter 7 bankruptcy, you may be required to sell the majority of your belongings that are not exempt. In a Chapter 13 bankruptcy, exemptions may have an impact on your repayment obligations. A bankruptcy lawyer will need to have a thorough understanding of your financial wellbeing before they can proceed with creating your legal strategy.
What Types of Documentation Should I Bring to My Meeting?
As was just discussed, it is imperative that you provide your attorney with all documentation related to your debts. Some of the most common examples of documentation that an attorney will want copies of include, but may not be limited to:
- Recent bills and mortgage statements;
- Recent bank statements for all accounts;
- Foreclosure or eviction notices;
- Letters or other forms of correspondence from all creditors and debt collectors;
- Legal documents associated with debt collection, especially any lawsuits and judgments;
- Copies of any and all insurance policies;
- Titles to all vehicles and real estate holdings;
- Check stubs;
- Tax returns and other tax documents; and
- Your current mortgage or lease documents.
Your attorney may ask for other types of documentation. These are simply examples of the most commonly requested.
How Do I Find the Right Bankruptcy Lawyer?
As you can see, an experienced and local bankruptcy lawyer will be crucial in helping you navigate the bankruptcy process. They will determine whether there are any alternatives to filing for bankruptcy available to you, and if not, what chapter of bankruptcy you should file for. They can help you gather all documentation necessary to move forward with your case, and will communicate with creditors and debt collectors on your behalf. Your bankruptcy lawyer can also represent you in court or at any meeting of the creditors, as needed.
If you need assistance finding the right bankruptcy lawyer for your needs, LegalMatch is here to help. All attorneys are screened, bar-certified, and guaranteed. LegalMatch works to connect those with legal issues to qualified attorneys in their area. Because state laws regarding bankruptcy can vary so widely, it is important that you work with an attorney local to you so that they better understand how your state’s laws will affect your case. LegalMatch is free and easy to use.