Filing for a personal bankruptcy can be a difficult choice, but millions of people face this decision every year. A significant number of Americans live on the brink, financially, and any emergency can push them over the edge. Declaring bankruptcy means accepting that an individual, couple or business cannot meet its financial obligations and has to restructure or be excused from debt payments. It is a decision necessarily accompanied by financial and emotional upheaval. While people can file for bankruptcy on their own, an experienced attorney can help them to achieve a better outcome.
Causes of bankruptcy
A significant percentage of Americans live on the brink financially, with few resources to see them through a crisis. As many as 25% have less than six months of expenses in a savings account. Student loans and medical costs are important sources of consumer debt and bankruptcies. A study by Harvard University found that 62% of all personal bankruptcies were due to medical bills.
Student debt accounts for 1% of all bankruptcies each year. In numbers, that’s 15,000 people filing for bankruptcy each year because they can no longer sustain payments on their student loans. Bankruptcy laws are set by the federal government and states do not have the right to make any laws in this regard.
Getting legal help for bankruptcy cases
Personal bankruptcies are becoming more common while the incidence of business bankruptcies is declining. Nearly forty years ago, in 1980, businesses bankruptcies made up 13% of the total number bankruptcies. At the present time, business bankruptcies have declined to about 3% of the total number. The number of people declaring personal bankruptcies, on the other hand, has increased. As of 2014, they accounted for 97% of the total.
While many people try and file for bankruptcy on their own, they will achieve better outcomes if they hire an experienced bankruptcy lawyer. Studies have shown that when bankruptcy claims are filed by an attorney, rather than pro se, they have a higher success rate. For Chapter 7 bankruptcy claims, the success rate for those filed by an attorney is over 95%, as compared to 60% for pro se cases. For Chapter 13 bankruptcy claims, the success rate with an attorney is 55% versus a very low .04% success rate for pro se filings.
How an attorney can help
In a very broad sense, bankruptcy proceedings can involve either liquidation of assets or restructuring of the debt. In liquidation proceedings, which happen under Chapter 7, all of the debtor’s property is sold or liquidated to pay off debts. In exchange, all outstanding debts are cancelled. The other kind of bankruptcy proceedings, under Chapter 13, restructure the debt instead, giving the debtor a more comfortable rate of repayment. Debtors get to keep their property, but must repay all debts in full.
An experienced attorney can advise you if your should file for bankruptcy and which option is better. An attorney can also help anyone filing for bankruptcy to make sure that they meet all federal regulations and laws. Any mistake in filing could lead the court to refuse the claim.
Filing for personal bankruptcy is a difficult decision. An experienced attorney can help with filing a claim and meeting all federal laws and regulations. Personal bankruptcy claims filed by an attorney on behalf of the client have a better chance of success.
