Understanding Bankruptcy: What To Expect From A Bankruptcy Attorney

Bankruptcy Attorneys in the US

Bankruptcy is a legal process that provides debt relief for individuals and businesses who can no longer repay their debts. It involves a petition filed with the federal bankruptcy court that eliminates or reorganizes debts. Hiring an experienced bankruptcy attorney is crucial for navigating this complex legal process successfully.

Reasons to Hire a Bankruptcy Attorney

Filing for bankruptcy without an attorney’s help can lead to costly mistakes or result in the case getting dismissed. An attorney can advise on the best bankruptcy option, chapter 7 or chapter 13, based on individual financial situation. They help prepare all required documents accurately to comply with filing requirements. Attorneys also represent debtors in court to ensure a discharge of eligible debts.

Chapter options

Chapter 7 bankruptcy aims to eliminate most debt within 3-6 months but makes future credit access difficult. Chapter 13 bankruptcy preserves credit by setting up a 3-5 year repayment plan for part of debts. Only an attorney can recommend the better option based on assets, income, debts.

Filing Process

Initial consultations are free with most attorneys. They collect documents like tax returns, bank statements, bills to assess eligibility. The attorney then files the petition with schedules of assets and liabilities. At the meeting of creditors, the trustee questions debtors about finances under oath with attorney present. If approved, court issues a discharge order eliminating remaining debts.

Post-Filing Support

Issues can arise like creditor objections, future debt problems. Attorney provides legal guidance during the entire bankruptcy case and helps address any post-filing creditor collection attempts against discharge debts.

Costs

Average fees for a basic Chapter 7 case range from $1,500 to $2,500. Chapter 13 rates are $3,000-$5,000 depending on case complexity. Most attorneys require a retainer upfront and payment plan for balance.

In summary, hiring a qualified bankruptcy attorney experienced in local courts gives the best chance at a smooth, successful debt elimination or debt repayment process under the Bankruptcy Code. They help navigate this complex legal arena.

What are the main differences between Chapter 7 and Chapter 13 bankruptcy?

Here are the main differences between Chapter 7 and Chapter 13 bankruptcy:

• Eligibility – Chapter 7 is available to most individuals, but Chapter 13 has stricter eligibility based on regular income and debt level.
• Debt Relief – Chapter 7 seeks to eliminate most/all unsecured debt like credit cards. Chapter 13 sets up a repayment plan over 3-5 years to repay a portion of unsecured and secured debts.
• Assets – Chapter 7 allows the debtor to keep qualifying exempted assets like a home or vehicle up to state limits. Chapter 13 requires use of disposable income to fund the repayment plan.
• Credit Impact – A Chapter 7 filing severely damages credit for 7-10 years, but credit may be preserved under Chapter 13 if the repayment plan is completed successfully.
• Duration – Chapter 7 is generally completed within 3-6 months. Chapter 13 cases can last up to 5 years to complete repayment terms of the court-confirmed plan.
• Fees – Legal costs are generally less for Chapter 7 ($1,500-2,500 average) compared to Chapter 13 due to ongoing payments and court supervision ($3,000-5,000 average).
• Eligible Debts – Most unsecured debts are erased in Chapter 7, including credit cards, medical bills. Chapter 13 targets unsecured and secured debts like mortgages and auto loans.

In summary, Chapter 7 is generally a faster, lower-cost option but involves more long-term credit impact, while Chapter 13 preserves credit at the cost of longer duration and repayment of some debt.