A Bankruptcy Attorney Can Explain Your Options

If you are struggling with debt, you may be considering bankruptcy.  A bankruptcy attorney can help you navigate the steps of insolvency or suggest alternate, legal methods of debt relief.  What exactly is a bankruptcy attorney and how can they help you?

A bankruptcy attorney is a lawyer that specializes in all areas of financial insolvency.  They are trained to find the best possible solution for individuals and businesses struggling under a large debt load. Since there is more than one type of bankruptcy and several options to avoid bankruptcy altogether, the bankruptcy attorney assess each client’s situation and matches them with the most feasible solution.  The attorney also makes sure the rights of his or her clients are protected during the process while acting as a mediator between the debtor and the creditors.

For those with a high debt load and low income, a bankruptcy attorney may suggest Chapter 7 bankruptcy.  Under the laws of Chapter 7, the majority of your debts are eliminated.  Do not be too hasty to embrace this option if your debts come from student loans, however.  Student loans cannot be discharged by Chapter 7 bankruptcy.  Other exceptions include: alimony, back child support, fraudulent debts, and certain taxes.  Many people believe that they will lose their homes, cars and other possessions if they file under Chapter 7, but this is not always the case.  Under certain conditions, your possessions may be protected under a reaffirmation agreement.  Filing Chapter 7 bankruptcy requires complete disclosure of all your debts and assets.  If you are also including a reaffirmation agreement, the paperwork required increases.

For companies that have the potential to generate significant cash flow if given the opportunity to restructure and reorganize, a bankruptcy attorney may suggest filing Chapter 11 bankruptcy.  Under the protection of Chapter 11 bankruptcy, the company or corporation retains its assets while working towards a sustainable solution.  As the intent of the company is to go bankrupt without liquidating its assets, and to stay in operation over the long term, it goes without saying that Chapter 11 bankruptcy is very complicated and requires a bankruptcy attorney that is very skilled and knowledgeable in this area.

While Chapter 11 bankruptcy is for companies and corporations, a similar opportunity exists for individuals: Chapter 13 bankruptcy.   A bankruptcy attorney may suggest Chapter 13 for individuals that simply need to reorganize their debt. This is commonly known as reorganization bankruptcy, as the individual and lawyer negotiate with the creditors for a series of payments to act as payment in full. This repayment plan may last as long as five years. With Chapter 7, you must pay off your mortgage holder within a few months or the foreclosure process will continue. Saving ones home is the most common reason for filing Chapter 13 with your bankruptcy attorney. The caveat of Chapter 13 is that you must prove to the court your ability to repay the debt under the restructured plan. Your income must not be too low or irregular and the debt you owe for property, or secured debt, cannot exceed $1 million. Your unsecured debt is what cannot be repossessed, such as medical bills and utilities, and cannot exceed $350,000.

With Chapter 13, your bankruptcy attorney will help you successfully repay priority debts, secured debts and unsecured debts in that order. Priority debts are those that other people are depending on—not creditors. Employee’s, alimony and child support falls under priority debt. Next is secured and finally unsecured debt. The repayment plan devised by your bankruptcy attorney and yourself will detail how all these debts will be handled but, like filing for Chapter 7, your unsecured debts may be completely discharged.

Bankruptcy is an offshoot of our excellent capitalist system, created by the system for those who need help with it, and should not be looked on with derision or embarrassment. It happens like car accidents happen: sometimes it is just unavoidable, sometimes there are too many factors involved. While most in our society are out to survive and make money, no one wants to see another fail. A bankruptcy attorney will help you back on your feet again.  If you need to get out from a crushing debt load, consult with a bankruptcy attorney to see which filing option is best for you.

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