Are you thinking of filing for bankruptcy? Filing for bankruptcy can be a stressful experience. But how can you file it? It requires careful consideration and the guidance of an experienced bankruptcy attorney. Suppose you are facing financial difficulties and are considering bankruptcy. In that case, it is important for you to understand the role of bankruptcy attorneys and their services. In this essential guide to bankruptcy attorney services, we will discuss what bankruptcy attorneys do and the types of bankruptcy they can help you with.
What Does a Bankruptcy Attorney Do?
A bankruptcy attorney is a legal professional who specializes in the area of bankruptcy law. They offer legal suggestions and guidance to individuals and businesses that are struggling with debt and are considering bankruptcy as a means of resolving their financial issues.
The primary role of a bankruptcy attorney is to help clients navigate the complex bankruptcy process and ensure their rights are protected. This includes guiding clients through the various stages of bankruptcy, from filing the initial petition to negotiating with creditors and representing them in court.
A bankruptcy attorney will also help clients understand the different types of bankruptcy available, assess their financial situation, and develop a strategy to help them achieve their goals. They will also advise on the impact of bankruptcy on their credit score, their ability to obtain credit in the future, and other important considerations.
Types of Bankruptcy
There are two main types of bankruptcy that individuals can file: Chapter 7 and Chapter 13. A bankruptcy attorney can help clients determine which type of bankruptcy is right for them based on their financial situation.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is also called liquidation bankruptcy. It is planned for individuals who cannot pay their debts and need more income. In a Chapter 7 bankruptcy, the debtor’s acquisitions are liquidated, and the returns are used to pay off creditors. Any remaining debts are discharged, meaning the debtor is no longer responsible for paying them.
To qualify for Chapter 7 bankruptcy, individuals should clear a means test, which compares their earnings to the median revenue in their state. If their income is less than the median, they might be qualified for Chapter 7. However, suppose their income exceeds the median. In that case, they might still qualify if they demonstrate that their expenses and other factors would make it difficult to repay their debts.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is also known as a reorganization bankruptcy. It is planned for individuals who have a regular income and can repay a portion of their debts over time. In a Chapter 13 bankruptcy, the debtor makes a repayment plan that lasts for three to five years. They make monthly payments to a trustee who distributes the funds to creditors.
To qualify for Chapter 13 bankruptcy, individuals must have a regular income sufficient to cover their necessary expenses and pay their debts. Additionally, their unsecured debts (such as credit card debt) must be below a certain amount, and their secured debts (such as a mortgage or car loan) must be below a certain value.
In short, bankruptcy can be a powerful tool for individuals struggling with debt. However, it’s important to understand the different types of bankruptcy and their implications before deciding. Consulting with a bankruptcy attorney can help you guide and support you in making the best decision for your financial future.