Filing for bankruptcy can be an unsettling time, and that is why bankruptcy laws and codes exist. There are methods in place to help you navigate bankruptcy, and avoid it if possible.
How Am I Protected During Bankruptcy?
Depending on your income, you may find yourself considering Chapter 7 or Chapter 13 bankruptcy. Before you move forward, be sure to understand how you’re protected during bankruptcy.
What Does a Bankruptcy Lawyer Do?
In the event you cannot pay your debts, such as a mortgage, a car loan or credit card bills, you should seek the professional advice of a bankruptcy lawyer. It is his or her job to walk you through your options.
When you consult a bankruptcy lawyer, they become your advocate in the debt collection process. Whether you file as a corporation or an individual, a bankruptcy lawyer can advise you on liquidating, or selling, assets in an effort to increase cash flow to put toward your debts. Typically, the first step when you meet with a lawyer is to avoid filing for bankruptcy in the first place. If possible your bankruptcy attorney will offer solutions for debt consolidation, or counseling to learn how to manage money differently.
Paperwork and Hearings
Your bankruptcy attorney can handle all paperwork for you during your counseling, and should you proceed to file for Chapter 7 or Chapter 13 bankruptcy. Additionally, your attorney can represent you at any bankruptcy hearings, the first of which is a mandatory meeting of creditors.
While it’s true that filing for bankruptcy excuses you from paying off debts as you initially agreed to do, filing negatively affects your credit and stays on your record for seven to ten years. Temporary relief from creditor harassment should not be your only reason to consider filing for bankruptcy.
What’s the Difference Between Chapter 7 and Chapter 13?
When you file for Chapter 7 bankruptcy, you’re protected from all debt collection, with the exception of student loans, child support payments and some debts acquired within a certain period of time before filing for bankruptcy.
Filing for Chapter 13 bankruptcy allows you to create a payment plan over a predetermined period of time and typically involves garnishing wages until the debts are paid in full. Your debts are not discharged, but repayment is delayed. In Chapter 13 bankruptcy, you will have to prove your income is sufficient enough to implement a payment plan.
With this knowledge and the expert assistance of a qualified bankruptcy attorney, you will be on your way to financial freedom sooner rather than later.