Have you recently considered filing for bankruptcy? If so, you may think that this is a process you can go alone. However, in the United States, it may be best for you to hire a lawyer to help you with the process. While bankruptcy can be fairly straightforward in some cases, there are many different factors to consider, and you’ll need to keep in mind just how life-altering declaring bankruptcy can be.
How will a lawyer help you when you are filing bankruptcy? For one, if you’re filing for Chapter 7 bankruptcy, you have a 95% chance of being successful when you have a lawyer on your side. Here are three other things that your bankruptcy attorney should be able to help you determine.
- Consider the type of bankruptcy you need. U.S. bankruptcy code has several chapters, each of which represents a different kind of bankruptcy filing. Some of these are meant for businesses, whereas others are fit for individuals; still others can be used for either purpose. For example, businesses can file for Chapter 11 bankruptcy if they want to reorganize their finances and establish a payment plan for their debts. Individuals who need the same treatment would file for Chapter 13 bankruptcy. Chapter 7 bankruptcy, meanwhile, is designed as both business and personal bankruptcy; it is a complete liquidation of assets, so although the debt will disappear, you could lose a home, business, or other assets if they haven’t been paid off. If you’re not sure which of these will work best for you, make sure to talk to your attorney before filing bankruptcy.
- Understand how bankruptcy will affect your credit. After a bankruptcy filing, it can take several years to get your credit back on track. In fact, a Chapter 7 bankruptcy can show up on a credit report for at least the next 10 years. Even a repayment plan, such as with Chapter 11 or 13, can have a long-term effect on your credit. Your legal representative should be able to explain just what it will take to get you back on track.
- Develop a plan for after the filing. Filing for bankruptcy can be a lengthy endeavor, in addition to being difficult on a number of levels. Chapter 7 often takes at least six months to file and complete, and Chapter 13 can take usually up to five years to pay back. Mostly, however, you won’t want to worry about what you’ll be doing after you’ve filed for bankruptcy. Make sure you work with your attorney to figure out how to get your finances back on track and determine how to avoid any future financial issues leading to bankruptcy.
Have more questions about bankruptcy? Talk to an attorney or leave a comment below.