What to Ask Your Lawyer Before Filing for Bankruptcy

Financial difficulties can leave you uncertain about what to do next. While bankruptcy is one of the best ways to take control of your finances, the bankruptcy process can be complex and intimidating for many, which is why the assistance of an experienced bankruptcy lawyer is necessary. 

There are several important questions to ask your lawyer, though. The following will review just some of the important questions to ask your lawyer before you decide to file for bankruptcy.

Is Chapter 7 or Chapter 13 Bankruptcy the Best Option?

Chapter 7 and Chapter 13 are the two types of personal bankruptcy. If you have a steady income and do not want to lose the assets that you already have, Chapter 13 is the best option. This is because as part of Chapter 13, you will establish a three-year to a five-year repayment plan. Successful completion of this repayment plan will result in the discharge of your debts. Chapter 7 bankruptcy requires that you sell all of your assets with the exemptions of some qualifying personal items. 

There are both advantages as well as disadvantages to both kinds of bankruptcy. As a result, it is best to carefully consider your options before proceeding. 

Which of My Assets are Exempt From Bankruptcy?

One of the questions to determine before filing for bankruptcy is which of your assets will qualify as exempt and consequently be able to keep after bankruptcy. Any assets that you own that are not exempt from seizure will be liquidated if you choose to pursue Chapter 7 bankruptcy. 

If you decide to file for Chapter 13 bankruptcy, ownership of non-exempt assets can result in higher monthly payments. Understanding which assets are eligible might impact your decision to pursue bankruptcy. 

Can I Afford to File for Bankruptcy?

It might be the last thing that you want to hear because if you are considering filing for bankruptcy, you are likely already short on finances, but filing for bankruptcy costs money. 

In some situations in which your credit might naturally improve or you do not have debts that would qualify for discharge through bankruptcy, it is likely a better idea to pursue some option other than bankruptcy. 

Will Filing for Bankruptcy Help Me?

As we just mentioned, some types of debts are not capable of being discharged in bankruptcy. 

For example, student loans are not capable of being discharged in bankruptcy unless a person can successfully establish that they are facing undue hardship. 

Will I Qualify for Bankruptcy?

If you are interested in filing for Chapter 7 bankruptcy, you must pass a means test. This means that a court must determine that you are not able to pay your debts. The test is based on your monthly disposable income. The higher a person’s disposable income, the less likely that individual will be found eligible for Chapter 7. 

If a person does not qualify for Chapter 7 bankruptcy, he or she might still qualify for Chapter 13 bankruptcy. A knowledgeable bankruptcy lawyer can help inform you about the bankruptcy type for which you would be the best candidate.

If I Pursue Chapter 13, How Long Will Repayment Last?

During the repayment plan period of Chapter 13 bankruptcy, your creditors will not be allowed to engage in collection efforts. If all of your payments are successfully made during this time, the amount of the debt will be discharged. 

To make sure that you successfully navigate this plan, it is a good idea to plan for your financial future. You should understand the amount of time on your payment plan as well as the amount that you will be required to pay each month. 

Will Bankruptcy Hurt My Credit?

Bankruptcy does not mean that you will no longer have an opportunity to rebuild your credit. It is important to understand, however, that details of the bankruptcy will likely remain on your credit report for several years. In the short term, bankruptcy can interfere with your ability to obtain a loan, an apartment, a motor vehicle, and sometimes even pursue career goals. 

Before you decide to file for bankruptcy, it is a wise idea to ask your bankruptcy lawyer about how the bankruptcy process will likely impact your life situation. This way you can best anticipate the challenges that lie ahead. 

How Does Your Bankruptcy Lawyer Operate?

There are several questions that you should ask your lawyer before filing for bankruptcy. These questions determine how helpful your lawyer will be in navigating the bankruptcy process. Some of these questions include:

• Whether the lawyer has substantial experience as a bankruptcy lawyer. It is important to retain the services of a lawyer who focused primarily on bankruptcy. Not only does this mean that the lawyer has successfully helped people like you before, but it also means that the lawyer can stay up to date with developments in bankruptcy law. This means that your lawyer should at least have several years of experience with bankruptcy law and have worked on hundreds of bankruptcy cases. 

• What is the lawyer’s track record with similar cases. The bankruptcy lawyer that you hire should be familiar with helping individuals pursue either Chapter 7 or Chapter 13 bankruptcy cases. If your case involves discharging a certain type of loan, you should make sure that the lawyer has ample experience doing so.

• What will the lawyer charge and what is the lawyer’s repayment system. It is important to find out what types of fees the lawyer charges as well as what is included in the fees. The lawyer should inform you about any additional costs that might arise during the bankruptcy process. It is also a good idea to ask about payment arrangements that the lawyer might have. You should then make sure that you are entirely comfortable with these arrangements. 

• Whether the lawyer will personally represent you. The lawyer who meets you during the initial case evaluation should be the lawyer who will appear in court with you and handle your paperwork. If another lawyer plans on going to court with you, the lawyer should know the details of your case and have met with you in advance. 

• How will you stay in contact. You should make sure that the lawyer’s preferred method of communication is acceptable to you. You should also find out who will handle your contact if the lawyer is not immediately available. For example, if you prefer to email, you should find a lawyer that is also comfortable with you emailing any questions that you might have about the bankruptcy process. 

What Details Does the Lawyer Need to Start Your Case?

The best bankruptcy lawyers will request certain types of information before beginning the bankruptcy process. Having all of this documentation readily available minimizes the likelihood of receiving a dismissal. 

In many situations, a bankruptcy lawyer will provide you with a detailed list during a free case evaluation that reviews all of the various documents that you should provide.

What Will Happen if My Bankruptcy is Denied?

In some unfortunate situations, people decide to petition the court for bankruptcy but later their case is either rejected or denied. 

There are a number of reasons why your bankruptcy case might be denied but some of the most common include paperwork that is not accurate, incomplete paperwork, paperwork that does not comply with court regulations, or cases of fraud or abusive behavior like running up a number of credit cards shortly before filing for bankruptcy or failing to disclose all of your assets. Following a bankruptcy denial, it is sometimes possible to remedy the problem. 

Many times, the most experienced bankruptcy lawyers can greatly decrease the risk that your bankruptcy petition is denied. It is still a good idea, however, to ask your lawyer what you will do to handle things in case your bankruptcy petition is denied.

Are You Prepared to Change Your Spending Habits?

Bankruptcy indeed offers the ability to discharge several debts, but the comfort that bankruptcy brings will not last very long if you are prepared to learn from your mistakes and avoid them in the future. Many times, this means that you are prepared to alter your spending habits and to begin saving more money. 

It is best to view bankruptcy as a second chance to build a strong credit history rather than an escape so you can return to the spending patterns that led you here. Before you navigate the bankruptcy process, it is best to truthfully ask yourself if you are prepared to change your spending habits.

Contact a Bankruptcy Lawyer Today

If you receive an undesirable answer to any of these questions from a potential bankruptcy attorney, you should not feel like you have to retain that lawyer. Instead, you should feel free to walk away. The most experienced lawyers have helped numerous people through this process and can answer various questions that you might have about the bankruptcy process. Contact attorney Melanie Tavare today to schedule a free initial consultation.