For the more than one million individuals who file for bankruptcy each year, the process can be long and often intimidating. There are court dates to attend, paperwork to file and creditors to contact, all under the stress and uncertainty of whatever underlying factors caused the economic crisis. During this economic hardship, going it alone may seem like a good option, but a good bankruptcy attorney can not only make the process smoother, but also save a filer money in the long run.
For one, a bankruptcy attorney can help determine which form of bankruptcy to file. Chapter 7 allows individuals to eliminate most forms of debt, provided the individual can pass a means test. This is the most popular form of bankruptcy, with close to two-thirds of all filings the Chapter 7 variety. The remaining one-third are Chapter 13, which allows filers to pay back a smaller portion of their debt during a given time frame, generally three to five years.
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Bankruptcy attorneys can also help navigate some of the newer regulations related to filings. The Bankruptcy Abuse Prevention Act of 2005, along with the Consumer Protection Act passed the same year, were measures meant to prevent filers who abused the system, but had the end result of making the process more difficult for many ordinary filers. A study from the American Bankruptcy Institute found that this law drove the cost of filing for bankruptcy up 40 percent. It also created heaps of new paperwork, making it harder for many filers and driving away many individuals badly in need of the fresh start bankruptcy offers.
Because bankruptcy can put many of an individual's assets at risk, individuals who need help understanding their rights can find it with a bankruptcy attorney. Bankruptcy lawyer firms help keep filers protected throughout the process and determine which type of debts can be discharged and what type of property a filer may keep. These include jewelry, vehicles and a certain level of equity in a home. A person's home itself is not always safe from seizure as part of the process, so an attorney can determine the best way to file and status of loans to prevent this if possible.
Bankruptcy attorneys can also be a source of stability during the difficult process. They are familiar with the laws in an individual's state, and can make sure all paperwork and debt schedules are complete without mistakes before filing. Because a single mistake can jeopardize the entire process, filing without an attorney is a risk most are unable to assume. The best attorneys are those who specialize in bankruptcy rather than those who practice it as a sidebar to a larger practice. These specialized attorneys understand the process, having answered the basic questions about the process many times, and are often familiar with judges and other court officers involved. They will file the petition with the court, serve as a liaison with the assigned trustee and appear with the filer during the Meeting of Creditors.
Individuals are not the only ones who can benefit from a bankruptcy attorney. Bankruptcy lawyer firms can also help business owners through the forms of bankruptcy available to them. A Chapter 11 bankruptcy, also known as a business reorganization, allows a company to pay a more manageable portion of the debt they owe, which creditors also like because it means they will receive a larger payment than if the company were liquidated. This process can be beneficial, but first the business owner must have a detailed debt repayment plan that a qualified bankruptcy attorney can help craft.
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