Should I Hire A Lawyer To Declare Bankruptcy

When a person finds themselves unable to effectively pay their bills and other financial responsibilities, then declaring bankruptcy becomes a possible option. Filing a bankruptcy case will halt creditor-related actions against the debtor (if only temporarily), but creditors may seek to neutralize the protective sanctuary of bankruptcy, and will advocate for an outcome that best serves their interests. A lawyer can assist a debtor with the intricacies of the following types of bankruptcies:

The Challenges of a Liquidation Bankruptcy

In a Chapter 7 bankruptcy, a bankruptcy trustee identifies the debtor’s assets, which are collectively known as the debtor’s estate, for a liquidation sale. There are certain kinds of assets that may be exempt from becoming part of the debtor’s estate, such as a homestead, tools, the family car and so on. Of course, the creditors involved in the case want their money, and they can object to any exemptions. Creditors want to maximize the amount of money generated by the sale of the debtor’s assets, because if and when the debtor complies with all other legal requirements, then all of remaining debts in the case will be discharged (forgiven). (Keep in mind, there are certain financial obligations that cannot be discharged, such as most school loans and child-support payments). That means the possibility that a creditor will only get some of their money back. Likewise, certain kinds of claims must be paid off before anyone else’s claims. Given the motivations of creditors, a lawyer representing the debtor can ensure that all available exemptions are considered and contest any challenges to the exemptions.

The Challenges of a Re-Organization Bankruptcy

There are two forms of re-organization bankruptcies. Chapter 11 is used by businesses as well as individuals whose income does not suffice for a Chapter 13 bankruptcy. Individuals with a steady annual income will file a Chapter 13 bankruptcy. The key to declaring a reorganizational bankruptcy is that the debtor seeks to repay their debts via a repayment plan. Granted, creditors do have some say in shaping the repayment plan. But a attorney working for the debtor can also shape the plan, and make sure that all relevant exemptions and necessary expenses are accounted for in the plan.