The option of bankruptcy is often a difficult decision to make. Once it has been decided, the process begins with a consultation with an attorney. It is possible to file without legal assistance, but the process is complicated and any mistake could lead to a dismissal of the case. An attorney handles all the paperwork, arranges the hearing date and helps their clients to take a means test to determine what type of bankruptcy they should file. An initial appointment does not need to be as intimidating as many people believe it will be. Here are some tips about what to bring along and an explanation of what happens during this first meeting.
Explaining the Process
The initial consultation is an opportunity for the lawyer to explain to the client how the process works, the basic timeline of filing and what will happen at their hearing. They discuss income and debts with the client and determine whether the individual or couple should file for Chapter 7 or Chapter 13 protection. Depending on the income of the client there may not be an option. Chapter 7 requires the filer to be below the local median amount or have an adequate level of accepted debts to reduce an income that is higher. This may require filling out a bankruptcy means test to determine.
Reviewing the Case
During the initial appointment, the attorney will want to know about the debts of the client. There is usually no reason to bring all bills, collection letters or other related paperwork at this time. The client can make the process faster by bringing a list of who they owe and the average amount of each debt. The attorney also needs to know about any legal judgement against the filers for these debts, any upcoming court dates and any garnishments currently in place. They also require a description of the assets including any equity in the home or vehicles and any retirement funds. A complete inventory of all household items is not necessary, but mention if something very valuable is owned. This includes any art, jewelry or other items with a value of more than a few hundred dollars.
Discussing the Future
Legal exemptions allow all filers to keep some of their property, including homes and vehicles. People do not have to surrender these items as long as the equity in the property does not exceed the amount allowed by their state. The exempt amounts are factored per person, so all numbers are doubled when a married couple files for bankruptcy together. The lawyer will want to know the plans of the couple for their home and vehicles with liens. Reaffirming the debt is often required by creditors after a bankruptcy. This is a contract the debtor signs stating they will continue to be responsible for the remaining debt on the home or vehicles they want to keep. Most attorneys will advise against this because they want their client to take advantage of the benefit of becoming debt free. The final decision is up to the filer unless the bankruptcy judge feels the payments are higher than what the filer can afford. It is sometimes possible to keep property without reaffirming if the loan is current and the payments are continuously made on schedule, but this is the decision of the creditor to make.
Preparing for Filing
A contract with the attorney is signed if the client agrees to follow through with the bankruptcy. Some attorneys require payment in full and others accept a retainer fee and allow the clients to make payments on the balance. The paperwork is not filed until all fees are paid. The client will need to gather all of their paperwork once they sign the contract. This includes all of their bills, collection letters and any forms related to small claims lawsuits. Pay stubs, bank statements and any other proof of earnings for the previous three months before the filing date is needed. Property tax records to show the current value of any home is also required. The attorney will provide the client with the information they need to complete the legally required credit counseling. This is usually done online and it generally requires two separate classes. One class is completed before filing and the second is completed within a certain amount of time after the hearing.
Most clients will feel a great sense of relief after meeting with an attorney for their initial consultation. They realize there was no reason to feel ashamed or think that they will face any judgement or criticism from the attorney. People that have felt like criminals because of avoiding debt collectors will appreciate finally having someone professional on their side. The process is complex and takes several months to complete, but once done, it makes it possible for people to have the chance to live fully again.
For a bankruptcy attorney, contact a lawyer such as Dennis Lee Burman Attorney at Law.