Bankruptcy is a complex procedure that requires you to make a host of critical decisions from before the time you file straight through to the time your debts are discharged and the bankruptcy procedure concludes. An experienced bankruptcy attorney can guide you through the dizzying maze of decisions, paperwork and procedure that marks a bankruptcy filing, whether it is a chapter 7 or chapter 13. At the outset, a bankruptcy attorney is there to counsel you on the bankruptcy process and whether it is right for you. They serve to help you take a critical look at your debts and assets and determine if bankruptcy is the path that will best help you or if a smarter approach is to attempt to improve your circumstances from a different angle. For instance, the bulk of your debts may be ones ineligible for bankruptcy protection, such as student loans, and an attorney can help you weigh whether you would truly benefit from bankruptcy.
If bankruptcy does appear to be the right solution for you, an attorney then can help you compare the chapter 7 and chapter 13 options. This is a critical decision and will involve you and your attorney examining the size and makeup of your debt, the assets you are willing to risk in a bankruptcy, and your ability to repay your debts or a portion of your debts, among many other considerations. Once you have selected your specific filing plan, an attorney can help you make key decisions beforehand. For instance, if you file for chapter 7, an attorney can provide you with your best options for keeping any assets that you do not want to lose to help pay off creditors. If you file for chapter 13, an attorney can work with you to figure out an ideal payment plan that you would be able to afford. Attorneys can also help you consider aspects of your bankruptcy such as the impact on your co-signers on any loans that will fall under your bankruptcy filing or whether to file jointly with a spouse or as an individual. In order to be a trustworthy guide for this aspect of your decision-making, an attorney needs to have a thorough understanding of federal bankruptcy laws.
During the filing process, your attorney will help you gather and prepare the necessary paperwork, which largely focuses on your income, assets, debts and expenses. Once the documents are filed and the bankruptcy is in motion, your attorney will be your key guide in ensuring that you file any additional documents and respond to necessary deadlines on time. Bankruptcy requires court hearings, including a meeting of your creditors, and your attorney will represent you at these procedures and ensure that your best interests are pursued. This is one reason that it is important to have an attorney with deep knowledge of local court procedures and the bankruptcy trustees in your region, because approaches can vary from locality to locality. These hearings could prove especially consequential if one of your creditors challenges the filing, making your attorney’s experience and understanding of your specific case crucial.
Throughout, a bankruptcy attorney should be readily available when you have questions or need a consultation as you navigate the process. A bankruptcy can be a challenging, confusing experience, but a good attorney can bring a measure of clarity and comfort and help ensure that it serves its chief purpose helping you regain your financial footing.
What Should I Expect From My Bankruptcy Lawyer
After filing for bankruptcy, all debtors must attend a mandatory hearing called the 341 meeting of creditors. But, depending on your case, you (or your attorney) might need to go to additional hearings. Some common types of hearings you can expect your attorney to represent you at:
• Chapter 13 confirmation hearings
• Chapter 7 reaffirmation hearings, and
• any other motion or objection hearings filed by you, your creditors, or the trustee.
In most cases, before you file your bankruptcy case, your attorney will be able to advise you about the hearings you can anticipate attending.
Expect Competence From Your Bankruptcy Lawyer
Not all bankruptcy cases are complicated, but they aren’t all easy, either. Either way, your bankruptcy lawyer should have the skill level necessary to handle your case. In general, the difficulty of your bankruptcy will depend on:
• the facts of your case
• whether you file for Chapter 7 or Chapter 13 bankruptcy
• whether the bankruptcy trustee will sell any of your property (an asset or “no asset” bankruptcy case)
• if you own a small business, and
• the involvement of bankruptcy litigation.
One way to find out if it’s a good fit is to ask whether the lawyer has represented clients in similar situations in the past.
Expect Sound Legal Advice From Your Bankruptcy Lawyer
In general, your retainer agreement (the contract you and your attorney sign) will outline the services your bankruptcy attorney will provide. Your attorney’s job is also to provide you with competent advice throughout the bankruptcy process. First, you can expect your attorney to tell you whether filing for bankruptcy would be in your best interest. If it is, you should also learn:
• whether Chapter 7, Chapter 13, or another type will help you achieve your financial goals
• what you can expect during the bankruptcy process, and
• whether your case involves any particular difficulties or risks.
Most importantly, if you have any questions, you can expect your attorney to respond to your calls or emails promptly.
Expect Your Bankruptcy Lawyer to Prepare and File Your Paperwork
Filing for bankruptcy requires you to complete a lengthy packet of forms. Almost all bankruptcy attorneys have specialized software that prepares and files your required bankruptcy paperwork with the court. You’ll provide your attorney with all of your financial information, such as income, expense, asset, and debt information. Your lawyer will use it to prepare the official forms and then go over the completed paperwork with you to ensure accuracy. You might have to provide additional forms or documents with the court or the trustee, too. Your attorney will make sure to do so promptly because missing a bankruptcy deadline can cause:
• delays in the process
• dismissal of your case, or
• other adverse consequences.
For these reasons, one of the responsibilities of your bankruptcy attorney is to know the local rules and filing procedures.
Bankruptcy Planning:
• Consider alternatives to bankruptcy. Bankruptcy might not be the only way to achieve financial peace. If bankruptcy is not the best choice, your attorney will suggest an appropriate bankruptcy alternative.
• Decide which type of bankruptcy to file. Chapter 7 and Chapter 13 accomplish different goals and serve different purposes. For instance, Chapter 7 will wipe out a lot of debt in a short time, but it won’t help you save a house if you’re behind on your payments. Your attorney will carefully consider your wants and needs and will recommend a course to help you achieve those goals.
Bankruptcy Preparation:
• Apply the means test. The means test calculation indicates whether you qualify for a Chapter 7 bankruptcy or whether you can afford to make payments in a Chapter 13 case. An attorney will understand how to use any special circumstances you present.
• Value your property. Do you know how to value your dining room set or your 5-year-old TV? Your attorney will make sure that you disclose and value your assets realistically.
• Choose and apply exemptions. Every state has a separate exemption system used to keep property in bankruptcy. Your attorney will understand how to use the exemption rules to protect as much of your assets as possible.
• Determine Discharge of Debts. Some debts don’t get wiped out (discharged) in bankruptcy. Others go away only if certain conditions get met. Your attorney will explain which debts will get eliminated and which will survive your case.
During Your Bankruptcy:
• Complete the schedules and other paperwork. You will file pages of financial data about your debts, income, expenses, assets, and recent financial transactions, all under penalty of perjury. Your attorney will know what you must disclose, how to value your assets, what constitutes income, which of your expenses is “reasonable and necessary,” which tax returns to supply, and a host of other issues.
• Guide you through the bankruptcy case. Your attorney will explain and prepare you for what’s ahead, like the role of the bankruptcy trustee and the judge, the steps you must take to qualify for a discharge, and what actions your creditors can take.
• Provide accurate and complete testimony. You must sign your bankruptcy paperwork under penalty of perjury, telling the court that as far as you know, the information is correct. At your meeting of creditors and anytime you’re in court, you’ll swear or affirm that you’re telling the truth. Your attorney will be with you to ensure that your testimony is correct and complete.
• Handle creditors who violate the automatic stay. Some creditors just don’t know when to quit collecting. If a creditor violates the automatic stay (the injunctive order that prohibits collection activity after the filing of the case), your attorney can demand compliance or ask the court to hold the creditor in contempt.
• Negotiate with your creditors. In Chapter 7 bankruptcy, your attorney can negotiate a reaffirmation agreement or redemption with a secured creditor that will allow you to keep your house or car. In Chapter 13 bankruptcy, your attorney will negotiate with your creditors on payment terms, the value of collateral (property that secures payment of a debt), and interest rates to make your repayment plan affordable.
• Modify a Chapter 13 repayment plan. If circumstances change during your Chapter 13 case, your attorney can help you ask the court to make a temporary or permanent adjustment to the terms of your Chapter 13 plan or request an early discharge due to hardship.
Rebuilding Credit After Bankruptcy
All in all, attorneys are good at making sure that your case gets through the process smoothly, thereby allowing you to take full advantage of your fresh start. Even so, sometimes things occur afterward that need attention (although this is rare). Your attorney can help resolve post-bankruptcy discharge violations if a creditor attempts to collect a debt that was wiped out by the bankruptcy. Also, many attorneys provide guidance on rebuilding credit. They’ll give you handy tips that will help you take advantage of the offers you’re bound to receive shortly after your case comes to a close.
Flat Fees Versus Hourly Fees
Many attorneys, especially bankruptcy attorneys, will charge a “flat rate” to represent you in a bankruptcy case. You’ll pay a fixed amount for the attorney to represent you, regardless of the amount of time the attorney spends on your case. Other attorneys will charge you an hourly rate, although it’s uncommon in consumer bankruptcy cases. The more likely scenario is for the attorney to charge a flat fee for the bulk of the matter. The lawyer will charge an hourly fee for any extra work required for services like defending against an objection to discharge. Your contract should spell out what the flat fee covers.
Average Chapter 7 Bankruptcy Attorney Fees
Most Chapter 7 bankruptcy attorneys will base their fees on how complicated your case is and what other attorneys in the area would charge for a similar bankruptcy. If you have a lot of assets or debt, you might pay more than an unemployed person with no assets. In general, attorney fees for a Chapter 7 bankruptcy range from $1,000 to $3,500 depending on the complexity of the case. Larger firms with more advertising and overhead costs sometimes charge more than a solo practitioner, but not always. Some larger operations offer low fees and count on a higher volume of cases.
Also, you might find a solo practitioner will cost more but offer more personalized service. It will depend on the office. You can expect a newer attorney to charge less than a more experienced lawyer, and if your case is a simple Chapter 7, you might not need an attorney with years of experience. Keep in mind, however, that bankruptcy is a specialized area of law and that most attorneys who don’t regularly practice bankruptcy won’t accept a bankruptcy case. When shopping around for a bankruptcy lawyer, call at least a few attorneys in your area. Compare their fees and ask if bankruptcy is an area they specialize in, as well as the number of cases they file each month.
Paying a Chapter 7 Attorney
You’ll pay your Chapter 7 attorneys’ fees in full before the attorney files the case and with good reason. Chapter 7 wipes out most unsecured debt in a Chapter 7 case, including attorneys’ fees. So if you had a balance due when filing the matter, it would get discharged. Chapter 7 attorneys know this, of course, and require full payment.
Lawyers Must Disclose Attorneys’ Fees to the Court
Attorneys’ fees in bankruptcy cases are somewhat unusual in that they must be disclosed to and approved by the court. However, this doesn’t mean that the bankruptcy court fixes the amount that attorneys can charge in bankruptcy cases. Attorneys are free to charge what is reasonable given their experience and the complexity of your case subject to review by the court. Some courts have a “presumptive” maximum fee for certain types of bankruptcy cases, but the attorney can overcome the ceiling by demonstrating a good reason for charging more.
Free Initial Consultation with Lawyer
It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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