What Do Bankruptcy Lawyers Do?
Bankruptcy is a legal procedure for reducing, eliminating, and restructuring debt. To declare bankruptcy, you must file with the federal court system and follow a process that may take several years to complete.
A bankruptcy lawyer specializes in the laws governing bankruptcy and helps clients through it. They provide advice for which type of bankruptcy to choose, if at all; they help clients find alternative solutions; and they represent clients in the court system, in hearings, and with creditors.
Some bankruptcy lawyers focus on commercial bankruptcy and work with small businesses and medium-and large-sized corporations. Others focus on individuals, known as consumer bankruptcy.
When Should I Contact a Bankruptcy Lawyer?
If you’re struggling with debt and creditors, you may want to file bankruptcy. It would be best if you talked to a lawyer specializing in bankruptcy before you make any moves. Some examples of specific situations in which you should be working with a bankruptcy lawyer include:
- You have a lot of debt, and you cannot pay it.
- Creditors are harassing you and your family.
- You cannot come up with a reasonable plan for paying off debt.
- You face losing your home or business because of debt you can’t pay.
- You’re looking into alternatives to bankruptcy, like credit counseling.
- You want to work with your creditors but don’t feel comfortable negotiating with them.
Can I File for Bankruptcy Without a Lawyer?
You may file for bankruptcy as an individual without legal representation. This is known as filing pro se. The court system strongly recommends you work with a lawyer because of the complexity of the process and the potential for making mistakes that can cost you. The consequences of bankruptcy are far-reaching, including damage to your credit, so working with an expert is important.
What Can a Bankruptcy Lawyer Do for Me?
To get the best outcome from considering bankruptcy, you must have a knowledgeable, experienced bankruptcy lawyer advising and representing you. While it is not technically required, a lawyer can do several things to make your life easier and get you better results:
- Suggest alternatives
Difficult debt does not mean you have to file bankruptcy. An experienced lawyer can advise you and help you understand if bankruptcy is the best choice. They can suggest alternatives to try before taking this big step.
- Explain the consequences
Bankruptcy is a solution to debt, but it comes at a price. Your lawyer will explain what you can expect, such as which debt will be discharged and which cannot; tax consequences; and the impact on your credit.
- Choose the chapter
You have a choice of the type of bankruptcy to declare, chapter 7 or 13 for individuals. It’s an important decision, and a lawyer will give you the best advice based on their knowledge and experience.
- File on your behalf
The filing process for bankruptcy is complex. A lawyer can represent you throughout the process, get the right forms, help you understand your options, and ensure you take all the right steps on time.
- Negotiate debt
If you choose chapter 13 bankruptcy, you will receive a structured, years-long plan for repaying debt. Your lawyer can negotiate with the courts to get you the best deal, which may include discharging some of the debt.
- Keep your assets
If you are concerned about losing your home or other assets, your lawyer can help you minimize the risks of that happening. In general, they can get you a better overall deal than if you try to go through this process alone.
How to Find a Bankruptcy Lawyer
If you are considering bankruptcy, don’t settle for a general practice attorney or a firm without relevant bankruptcy experience. Seek out a lawyer who specializes in bankruptcy and has years of experience helping clients like you. Try these sources for finding a bankruptcy attorney:
- Your financial advisor or accountant
- The American Bar Association or your state bar association
- The National Association of Consumer Bankruptcy Attorneys
- Friends or family who have been through bankruptcy
Choosing and Working with a Bankruptcy Lawyer
Most lawyers offer free initial consultations to help you get advice, and so you can interview and choose the best professional for your situation. As you look for a bankruptcy attorney, ask important questions at these meetings:
- How many years of experience do you have working with bankruptcy clients?
- Are your clients individuals or businesses?
- Do you only work on bankruptcy cases?
- What do you think about my situation, and what would you advise?
- What are your fees?
Considering the financial situation, fees are very important to consider. Filing for bankruptcy as an individual can cost between $500 and $6,000, so be sure the fees a lawyer charge make sense.
You’ll also need to select someone you feel comfortable talking to and working with for the entire process. They should be communicative and easy to contact, and you should be responsive to their requests for information or documents. Be open with your chosen lawyer so that they can provide you with the best advice.
Filing for bankruptcy is a big step but is often necessary for discharging debt. Be sure you choose an experienced lawyer you can afford and who makes you feel confident about the outcome you’ll get in the process.