"Bankruptcy" can be a terrifying word, but it's often one of the best options available when your financial situation becomes sufficiently challenging. Unfortunately, bankruptcy is also a complex process. While most people understand the basics of discharging their debts, many may be less familiar with the complexities of the process or the long-term implications of filing for Chapter 7 bankruptcy.
Unfortunately, hiring a lawyer only after you've decided to file for bankruptcy (or even started the process!) isn't always the most effective option. One of the most significant benefits of working with a lawyer is receiving advice throughout the process to make the best decisions possible. The earlier you start working with a lawyer, the better your overall outcome will likely be.
When Should You Hire a Bankruptcy Attorney?
Knowing when to file for bankruptcy can be complicated and more than a little anxiety-inducing. If you have many financial obligations without the means to pay them, bankruptcy may be the best option. The circumstances where bankruptcy makes sense can vary wildly depending on your unique financial position, so you should never feel ashamed if you find a relatively small amount of debt unmanageable.
However, not everyone will qualify for bankruptcy. You may need to pass a means test or pursue alternative options depending on your income. Previous attempts to file for bankruptcy can also affect your current options. Since qualifying for bankruptcy can be complicated, the best time to talk to a bankruptcy attorney is before you've made any final decisions.
How Will a Bankruptcy Attorney Help You?
If you haven't yet filed for bankruptcy, an attorney can help you by examining your finances and advising whether bankruptcy is your best option. Your income over the last six months is the most important part of determining your eligibility for bankruptcy. Generally speaking, you are eligible for bankruptcy if you make less than the median income for your state.
If you don't qualify based on these criteria, the judge must consider your current income versus your debt servicing requirements. A bankruptcy attorney will review your financial records and compare your income to debt obligations. Your attorney can also help you collect the necessary documentation to show how much discretionary income remains each month to pay down your debts gradually.
What If You Don't Qualify for Chapter 7 Bankruptcy?
By working with a lawyer as early as possible, you can avoid filing an unsuccessful Chapter 7 bankruptcy petition. Additionally, your lawyer may be able to recommend other options. Many petitioners who don't qualify for Chapter 7 bankruptcy may instead qualify for Chapter 13 bankruptcy. This latter form of bankruptcy is easier to qualify for but requires you to repay some of your debts.
Ultimately, working with a lawyer before filing for bankruptcy offers numerous advantages. In addition to helping you prepare the best possible petition, they can review your financial information and suggest alternatives if a Chapter 7 bankruptcy isn't appropriate for your situation.
Contact a bankruptcy law firm to learn more.Share