Bankruptcy - An Overview

Bankruptcy can be defined as the legal inability to pay debts or if you have already legally declared bankruptcy. Bankruptcy is a common occurrence in the United States as thousands of individuals and businesses each year find themselves in an impossible financial situation that is believed to be inescapable. Bankruptcy did not exist in ancient Greece, and if a person could not pay his debts they were forced into "debt slavery." Bankruptcy today exists for a reason, and that is to protect individuals from some of the harms of being financially in debt. Bankruptcy protection may be the answer these individuals or businesses are looking for to get debt relief but is it the best answer?

In most cases bankruptcy is initiated by a debtor, though sometimes it can be filed as a bankruptcy petition by the creditor against the debtor so they can try to get a portion of what they are owed or to restructure the amount of debt. Obtaining bankruptcy protection may be a confusing, even grueling process, and because bankruptcy laws can be complicated due to the many different types of bankruptcy, you should consult a bankruptcy lawyer to help you with your case. If you are absolutely at the end of your rope and bankruptcy seems like the only answer, a bankruptcy attorney can help verify if it is the right choice. It is especially imperative to hire an attorney if you own a business or have assets.

An experienced bankruptcy lawyer will know the ins and outs of the legal system, and they will be able to discuss the different types of bankruptcy and advise you on which one is best for you. Keep in mind that there are several types of bankruptcy including Chapters 7, 9, 11, 12, 13. Married couples tend to utilize Chapter 7 and businesses typically utilize Chapter 7 and 11. A lawyer can help you decide which route will be best for you, and they should be able to answer any question you may have to help you understand the bankruptcy process.

Once a bankruptcy lawyer has explained your options and you decide to hire them, they will oversee your case. In some situations, the individual or business will go before a judge and negotiate a payment plan. They will receive a partial or full discharge of their debt. Keep in mind that although this scenario may sound appealing, it carries with it some very negative consequences. Your insurance premiums may be higher, and your interest rates may be raised. Furthermore, certain personal possessions, such as your home or car, may have to be sold off to settle your debts. If you file for bankruptcy, your debts will be discharged, but your credit can be ruined, most times for up to 10 years. A bankruptcy lawyer will explain the risks to you as well as offer other possible alternatives to bankruptcy. Keep in mind that a bankruptcy lawyer will have extensive knowledge about debt management. It is also important to consider not hiring an attorney whose fees are the lowest, because their substandard or haphazard practice may cost you more in the long run. Checking with your local bar association can help you discern what is an appropriate fee for a bankruptcy attorney.

A bankruptcy attorney may help you in more ways than financially; they may also give you invaluable advice. Experienced attorneys have gone through the process countless times with others who are in about the same boat with their financial problems, and while they aren't psychologists, they most likely will know how to handle certain situations and can help give you advice or tips on how to start over and move past the emotional difficulties of bankruptcy. Without a bankruptcy lawyer, the emotional strain of dealing with bankruptcy alone and stress of trying to understand bankruptcy laws may leave one worse for the wear, whereas a lawyer can help shoulder some of the burden for you.

If you are ready to contact a bankruptcy lawyer to explore your options for debt relief, visit the American Bar Association (ABA) website. The ABA features a lawyer locator, which allows the user to search bankruptcy lawyer profiles in your local area. Access to the site and profiles is free. If you choose to hire an attorney, it is important to find a bankruptcy lawyer that you feel comfortable with, one who you trust to do their job reliably and efficiently. The potential benefits of hiring a bankruptcy lawyer as opposed to trying to go through the process alone are many, as these are people who want to help you when you may be feeling lost, isolated, and confused.


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