bankruptcy and using attorneys

Bankruptcy and Using Attorneys

Atty. Dave Falvey

Action Advocacy, PC is an officially recognized Federal Debt Relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

http://www.actionadvocacy.com/




Can I file on my own?

Some debtors try to file a bankruptcy on their own without using legal counsel. While there are some good reasons to do this - mainly saving on the lawyer fees, it's usually a wise option to use an experienced bankruptcy lawyer.

There are a lot of strategy issues when filing a bankruptcy, a lot of legal requirements, and many bankruptcy rules that can help the debtor and other good legal reasons to use a lawyer.

There are also practical reasons such as that when you have a lawyer, the creditors and bill collectors have to deal directly with the lawyer and not you. A lawyer will often be better for your overall finances and for reducing your level of stress.




Must You Use a Bankruptcy Lawyer?

Debtors are not required to use a lawyer. When a debtor files on his/her own, it's called a "pro se" filing. For very simple Chapter 7 bankruptcies, it may be something to consider. Simple means that your income level easily falls below the state minimum, that you don't own a home, a car, or have significant income.

The debts should be unsecured (there's no collateral that the debtor might lose) and they should be clearly identifiable.

Debtors should also know though, that there is a lot of paperwork to be done when filing a bankruptcy. The filings include a petition and filing a league number of bankruptcy schedules.

Debtors who want to file but wish to exempt some of the assets need to know exactly how to file the exemption too. This can be quite cumbersome for someone filing on their own.




When Should the Debtor Use a Lawyer?

Chapter 13

If you're filing a Chapter 13, then a lawyer is highly recommended. In addition to the petition and schedules, Chapter 13 debtors need to file a bankruptcy plan. Filing the plan is quite complicated. For starters, it requires a full understanding of the difference between secured debts and unsecured debts.

This can get especially confusing when judgments and liens are involved. One of the key aims in a Chapter 13 is to save the debtor's home, car, tools and other valuable assets.

For Chapter 7 debtors who rent and use public transportation, there's much less risk that something can go wrong. But most debtors who have a home and a car - especially if the assets are worth more than the appropriate exemptions will risk losing much more in monetary value than the monetary cost of hiring an attorney to review their financial situation and to protect their assets.





It's crucial to use someone who knows exactly how the assets are valued, what must be in the plan and what the debtor must pay and how - in order to save assets. There are two parts to the Chapter 13 plan that relate to saving personal assets such as homes and autos. The first is that the debtor must pay the arrears over the length of the plan.

The second is that the debtor must continue to pay the monthly payments during the plan period. A bankruptcy lawyer will make sure the right amounts are paid at the right times.

Additionally, a lawyer will know how to work through the income and expense part of the Chapter 13 plan to minimize the amount that will have to be paid to unsecured creditors. A lot of the calculations are done through spreadsheets or sophisticated software that the bankruptcy lawyer will use to expedite the process.

For the individual debtor, the cost of the software may be even more than the cost of the lawyer.





Chapter 7

Debtors must pass a means test in order to file a Chapter 7 bankruptcy. This is to make sure that debtors with an ability to pay down some of their debts don't unfairly avoid that duty. There are different parts to the means test. Using state guidelines is the easiest part.

Debtors who don't pass the guideline test can still qualify if they can show some uniqueness to their situation - that their combination of income and expenses means they really can't afford to pay down the debt.

Only a skilled attorney will know how these secondary tests can be used to keep the debtor in Chapter 7 instead of the more costly Chapter 13.

Some debtors will want to use additional remedies.


http://www.connecticutbankruptcymeanstest.com/




Debtors in Chapter 7 may wish to file a reaffirmation agreement - often so they can keep certain assets. Reaffirmation agreements are complicated documents that require the approval of the creditor and the Bankruptcy Court.

A bankruptcy lawyer will know how to prepare these agreements, how to negotiate with the creditor and how to present the agreement to the Bankruptcy Judge.

Debtors in Chapter 13 may want to strip secondary mortgages. Some debtors have multiple mortgages. Because of the recession which caused homes to lose value, many of these secondary mortgages are now worthless.

There is a remedy that allows debtors to strip secondary mortgages that have no real value. It's a complex process that requires the skills of a knowledgeable lawyer.




Debtors with Businesses

A debtor who has his/her own business will often sign for many of the business loans. Separating out the business from the personal loans can be crucial to saving the business. In some cases, it may be possible to consolidate some of the debts to help save the business.

These tasks require the knowledge and talents of a bright bankruptcy lawyer.

Exemptions: a lawyer will help identify all the exemptions that can apply to save assets. For example, many debtors on their own would miss the wildcard exemption that can be used in addition to direct exemptions.




Debtors with Businesses

Dischargeability of Debts

Some debts can be discharged in bankruptcy but others like school loans generally can't. Some tax debts can be restructured in bankruptcy if done the right way. Again, a bankruptcy lawyer will help minimize the debt obligations.

Less Stress

As soon as the debtor hires the lawyer, all creditors and the Bankruptcy trustee have to deal with the lawyer only. It's hard enough for most debtors to figure out where their next meal will come from without the added stress of responding to phone calls and letters. Hiring a bankruptcy lawyer immediately eases that burden.
