The word bankruptcy conjures such terrible connotations that consumers miss the point: It provides creditor protection and debt relief.
A bankruptcy lawyer should protect your assets from debt collectors and find a solution to relieve you of financial obligations.
It’s possible to file for bankruptcy “pro se,” but statistics show you’ll be happier if you engage an attorney, whether you select Chapter 7 or Chapter 13 bankruptcy.
Ed Flynn of the American Bankruptcy Institute says lawyers represented customers in 91.5% of Chapter 7 cases filed in 2017. 96.2 percent of lawyers canceled clients’ debt. Four hundred twenty-eight thousand ninety-seven debt-free people left court.
People who represented themselves in Chapter 7 bankruptcy proceedings successfully 66.7% of the time.
Chapter 13 bankruptcy statistics are considerably worse. Only 2.3% of self-represented consumers won. When a lawyer represented a client in a Chapter 13 case, the success rate rose to 41.5% (debts dismissed after repayment plan).
If your financial situation has deteriorated and you need protection from creditors and debt relief, a bankruptcy lawyer can help.
What Should I Expect from a Bankruptcy Attorney?
Like other legal situations, bankruptcy is a process, and it’s best to have an attorney help you through it.
A good bankruptcy attorney will provide you peace of mind with these four things:
- A free consultation to review your situation.
- Advice on bankruptcy filing alternatives
- Filing bankruptcy documents
- Representation when the case goes to court.
A bankruptcy interview with a lawyer lasts 30-60 minutes. Couples should come together so all inquiries can be answered honestly and truthfully. The attorney can explain your alternatives, including filing bankruptcy without a spouse.
Guessing how much and who you owe is risky. The attorney will require proof of your assets and debts. If you want an honest assessment, don’t hold back. Your attorney’s advice is only as good as the facts you offer.
As soon as the attorney has enough evidence to examine your case, he should advise you. A good attorney won’t always suggest bankruptcy. Possible solutions include debt settlement or a debt management program.
If you file bankruptcy, your attorney will file court documents. Remember that the attorney is there to preserve your assets, so let them know what matters most to you.
The type of bankruptcy determines the next step. In a Chapter 7 case, a trustee will consider your bankruptcy petition. Your lawyer has usually done all the difficult lifting. When you utilize an attorney, these sessions are painless because you provide detailed schedules and supporting documentation.
Chap. 13 cases can be tough. You must meet with the Chapter 13 trustee and present a court-approved Chapter 13 Plan. Most non-lawyers struggle with this aspect. To be “confirmed,” your Chapter 13 Plan must meet all Bankruptcy Code standards.
Do I Need a Bankruptcy Attorney?
Hiring an attorney is a major advantage in filing for bankruptcy, as the American Bankruptcy Institute’s statistics show.
The math on this subject is overwhelming:
- If you use an attorney, you are unlikely to be denied a discharge. One-third of self-filers aren’t discharged.
- One in 50 Chapter 13 filers are discharged. Hiring a lawyer increases your chances of success to 4/10.
It’s evident why. Complex topic: bankruptcy. Consumers who say they don’t have money owe creditors. Both parties’ lawyers are seeking to win over the judges.
You could lose on minor blunders if you’re not acquainted with legal documents or arguing eloquently. A seasoned attorney knows what documents to file and when. A seasoned attorney knows the judges and what arguments to make.
Incorrectly completed documentation might have disastrous consequences. A paperwork error could cause the Chapter 7 trustee to sell your home. These blunders are rare when using an attorney but common for self-filers.
Hiring an attorney has a substantially greater success percentage than self-filing.
Signs That You Need a Bankruptcy Lawyer
Financial trouble rarely comes suddenly. It’s a gradual process with multiple warning flares.
If you ignore financial warnings, you may be forced to declare bankruptcy.
Some of the obvious signs that bankruptcy might be in your future include:
- Overdue invoices get minimal monthly payments.
- Your credit cards are maxed out, and debt is mounting.
- You use credit cards to pay for groceries, rent, and utilities.
- Monthly overdraft fees
- Day and night, collectors call your home.
- Unpaid debts have creditors suing or threatening to sue.
- You don’t qualify for debt management or consolidation loans.
- A job loss, divorce, or medical setback wrecks finances.
In many circumstances, bankruptcy can be a good debt-resolution choice. There are drawbacks. It can harm your credit for 7-10 years and prevent you from acquiring security clearances.
If you can’t fix your problems in five years, bankruptcy is possible.
How Much Do Bankruptcy Lawyers Charge?
Bankruptcy lawyer fees vary by form, complexity, and location.
A Chapter 7 bankruptcy costs $1,500 and Chapter 13 costs $3,500. Filing fees ($338 for Chapter 7; $313 for Chapter 13) and credit counselling and financial management courses cost $10 to $100.
