Don’t Forget the Facts of Bankruptcy Before You Hire an Attorney
Are you considering filing bankruptcy? If so, you’re not alone. Each year, more than one million Americans file for bankruptcy. A number of circumstances can result in a bankruptcy: a failed business, a messy divorce, and, in 62% of all cases, illness and medical bills, according to The American Journal of Medicine.
Before you begin working with a bankruptcy attorney, there are a few things you should make yourself aware of.
Know the differences between types of personal bankruptcy.
Before you begin digging yourself out of debt, it’s crucial to know the different types of bankruptcy that make this process possible. Most likely, you will choose either Chapter 7 or Chapter 13 bankruptcy; the numbers here refer to the different parts of U.S. bankruptcy code.
A Chapter 7 bankruptcy is often considered the “quicker” form of bankruptcy because it allows you to liquidate any debt that you have. This type of filing will cost around $1,500 to $3,000 on average, but the success rate is over 95% when working with an attorney. You won’t have to repay your debt after a Chapter 7 filing, but you could wind up losing any unsecured assets as a result.
You might also file for Chapter 13 bankruptcy, especially if you need to hold onto unsecured assets like a mortgage or vehicle. These types of bankruptcies will take much longer, generally lasting at least a couple of years. If you file for Chapter 13, you will need to pay back any debts you have once a repayment plan has been established.
Personal bankruptcies differ from a Chapter 11, which is reserved for business bankruptcy cases. Like Chapter 13, Chapter 11 can help business owners reorganize their debt and establish a repayment plan. A Chapter 7 bankruptcy, however, may be used by either individuals or businesses in order to liquidate any and all assets.
Understand why you can (or can’t) file for bankruptcy.
No matter which type of bankruptcy filing you choose, you’ll need to keep in mind that some types of debt can’t be eliminated. Student loans, for example, are notoriously difficult to get discharged, and this can only be done under extreme circumstances. Depending upon whether or not you have business assets mixed in with personal ones, your options may be further limited or the process could become convoluted without a lawyer present.
If your bankruptcy is the result of a divorce, it’s still possible for you to file, but it could complicate matters. It’s best to discuss the matter with a lawyer rather than kicking off the process on your own.
Have a plan for life after bankruptcy.
It’s one thing to find an attorney who will help you file for bankruptcy. However, finding one who will act as a support system before, during, and after filing is another matter entirely. Make sure you find a legal team that will provide you with the information you need about bankruptcy before you begin the process. When you meet for a consultation, you’ll want to ask about what you can do after everything is over, so you can begin to rebuild your credit.