Wednesday, December 16, 2015

Bankruptcy Lawyer Dirty Secrets

The field of bankruptcy law has exploded in recent years, even though the process of filing for bankruptcy really only involves filling out a few forms. Misconceptions, frightening news articles, and misleading advertisements put out by many of the firms now specializing solely in bankruptcy law have convinced the average consumer that they absolutely must hire an expensive attorney in order to get rid of the money they owe.

Even if the client has an above-average number of questions or a combination of income, debt, and assets that are more complicated than most, an experienced lawyer should be able to handle a bankruptcy claim from start to finish in a matter of hours. Some honest legal professionals only bill their clients for this small amount of work, but the majority charges a minimum of $2,000 for a basic filing. In fact, in some areas, rates can skyrocket as high as $10,000 for a single case! 

These inflated prices have actually driven many of the honest attorneys out of bankruptcy altogether, because once a client has been convinced that bankruptcy should cost them thousands of dollars, they are naturally wary of hiring anyone who charges much less.

Filling out bankruptcy paperwork is so simple in many cases that attorneys have their secretaries fill it out. Yet the field has created so much money for certain greedy lawyers that instead of letting their clients know this, they instead pocket the cash and stand back and watch while bankruptcy filings needlessly get out of control.

No matter what circumstances brought you into your current financial situation, declaring bankruptcy should never be a first choice when trying to deal with high levels of debt. Especially after taking into account high attorney fees and new credit-card-friendly laws, it would be much better for you in both the short-and long-term if your financial difficulties are handled out of court.

Bankruptcy Law: Some Important Facts

As applying for loans, credit cards and other forms of credit are easier to come by, so are the bankruptcy rates in the United States. In a ten year period, between 1994 and 2004, bankruptcy rates in the United States nearly doubled. The government’s reaction was to take a closer look at reasons parties were filing for bankruptcy, new laws were instated to ensure that individuals and businesses had valid reasons for applying for bankruptcy. 

One of the primary laws regarding bankruptcy that was passed in the United States in 2004 is the Bankruptcy Abuse Prevention and Consumer Protection Act. This law just went into effect in October 2005, but has already caused quite a stir in the financial and bankruptcy law arenas.  Besides making it more difficult to qualify for Chapter 7 bankruptcy, or complete bankruptcy, the law imposes stricter rules and budgets on Chapter 13 debtors. 

A major change the law makes throughout the United States is the need for debtors to have filed tax returns for four years in a row before qualifying for bankruptcy.  As well, dischargeable debts, or those debts where personal liability is taken away by the court system, is more difficult to come by. The Act requires that debtors prove good reason for dischargeable debt and is even requiring more debtors to take responsibility with non-dischargeable debt budgets.

As far as the two major types of bankruptcy laws are concerned, Chapter 13 bankruptcy is that which allows the debtor to keep some assets upon proving only limited debt and a steady income. This bankruptcy is excellent for those debtors who have gotten themselves into major financial difficulty but still have means of paying for some assets. The court will set up a repayment schedule and budget that allows for full repayment of mortgages or cars within three to five years. 

If repayment is simply not an option, the bankruptcy law requires that a debtor will file for Chapter 7 bankruptcy. This is often referred to as complete liquidation of assets, except for exempt items. Exempt items in a bankruptcy hearing are determined by the court and are usually items that are a necessity, such as a car or work related items. As well, the courts will distribute debts into two categories: non-dischargeable and dischargeable debt. 

Non-dischargeable debts also fall into two categories: non-dischargeable due to wrongful conduct on the debtor and non-dischargeable due to public policy. Wrongful misconduct by the debtor could mean theft or laundering money while public policy could include child support payment or court related judgments. 

Keep in mind that in either type of bankruptcy, an individual is almost always required to still pay for taxes, student loans, alimony, child support or court related fees. This is the place where many bankrupt parties are misled in the Chapter 7 bankruptcy, as it is often referred to as "a fresh start". While the court can set up payment plans to help the debtor repay public policy debts, even Chapter 7 debtors will still be required to make payments. 

Another major point regarding bankruptcy law is that a bankruptcy will stay on a credit report for approximately ten years. This will make it extremely difficult to become eligible for any type of credit, even a credit card, but especially for a car loan or a house mortgage. While some creditors will still offer limited credit to bankrupt individuals, the interest rates and finance charges are usually through the roof. This makes it even more difficult for debtors to get back on their feet. 

Last but not least, keep in mind that bankruptcy law will require any co-signers to be responsible for debt payments. If mom or dad signed for a car loan when you were young and you still owe on that car, they are liable for payments. These friends or family members who were once doing you a favor may be brought into the bankruptcy law court proceedings, which can put a strain on friendships and family relations. 

For specific bankruptcy law questions it is best to contact a bankruptcy attorney or legal aide in your county or state. Bankruptcy laws and proceedings may vary slightly from state to state, so be sure to make contacts in the state where you plan to file for bankruptcy.

Bankruptcy Forms: Having The Right Ones

Filling out bankruptcy forms can be one of the most difficult parts about filing for bankruptcy, although these forms are a necessary evil to complete the legal process. Unfortunately these legalities can add major emotional stress to an already difficult situation. Especially if you have decided to go about filing on your own, without the help of a lawyer or financial service company, you may find yourself overwhelmed with trying to understand which bankruptcy forms are right for which chapter.

If you are an individual who is filing for bankruptcy, most likely you will be filling out bankruptcy forms specifically dealing with either Chapter 7 or Chapter 13. Even as a business you may be filing for Chapter 7 or Chapter 13, although you may be filing for Chapter 11 as well. In any case, there are separate forms that need to be filled out with each particular chapter stating the intention to file bankruptcy under that chapter. 

The individual or business may also have other special bankruptcy forms that go along with a particular chapter. For instance, Chapter 13 and Chapter 11 are reorganization chapters and will require a form that discusses how and when creditors will gather to meet and discuss the finances of the individual or business for repayment plans. If the individual is filing for a complete liquidation, Chapter 7, forms for possible exemption of assets will need to be filled out if the debtor plans to keep any of their personal belongings. 

In all cases, the debtor will be required to file bankruptcy forms regarding a statement of petition, a list of creditors, personal income, personal property, and Declaration of penalty under perjury. These forms will simple let the courts know of the individual or business’ plan to file, the assets the debtor has available, the current available income, and the debtor’s knowledge that lying about finances will have legal consequences.

With the new age of technology, all bankruptcy forms are available through the United States court system at Of course the availability of the forms does not necessarily mean that all individuals or businesses will clearly understand which forms apply to them. If you are confused about which forms to fill out, don’t be afraid to ask the court system for help.

Unfortunately the court system may be overwhelmed with other cases they feel are more important making it difficult to find answers to bankruptcy form questions. In this case, you can always consult with a legal aide, a bankruptcy attorney or even a financial service organization that can help you understand the paperwork better.

Even if you don’t plan on hiring an attorney to handle the case for you, it may be worth the time and energy to consult them regarding the paperwork that goes along with the process. You may also want to consider a bankruptcy service organizations online, which can help answer questions and guide debtors through the process. 

Keep in mind that each state court system has secretaries available who can type up the forms for you, although there will be an additional charge for this service. Most law firm or legal aide organizations have similar services that may be beneficial in helping debtors get through the process of filing bankruptcy forms.

Bankruptcy Attorney: Questions To Ask

If you have tried every way imaginable to avoid bankruptcy but find that you have no other way out of the situation, the first step you should take before filing is to consult with a bankruptcy attorney. A bankruptcy attorney can be hired or appointed by the court systems to help you through the court proceedings. If you decide to select your own attorney, make sure to select someone with previous experience in bankruptcy law, preferably someone who works specifically with bankruptcy. 

No matter which bankruptcy attorney you select, you should always be prepared to ask the attorney questions regarding your own case. Here is a list of questions you should always ask your attorney to make yourself more aware of your bankruptcy proceedings:

* What type of bankruptcy is right for me?

Keep in mind that the Federal court system in the United States has eight different types of bankruptcy filing available. Of course the two most popular are Chapter 13 and Chapter 7, but there are a variety of different details and rules that apply to each type of filing. A good bankruptcy attorney will be able to sift through your financial difficulties and recommend the best type of bankruptcy for you.

* How do I file for bankruptcy?

Filing for bankruptcy will need to be done in the state where you currently live. If you plan to remain represented by a bankruptcy attorney, their legal staff can help to prepare all of the paperwork that is necessary to present to the court system. If you simply want to use the bankruptcy attorney for a consultation, make sure you don’t leave the attorney’s office without the necessary paperwork to begin the bankruptcy process.

* What type of fees will I owe?

This is important to ask in regards to your bankruptcy attorney as well as the court system. Most bankruptcy attorneys will give a free consultation but any remaining time on the proceeding or in court will cost a fee. Some attorneys charge by the hour while others charge a flat fee for bankruptcy services. As well, the court systems usually charge a court fee connected with filing the case, administrative charges and extra Chapter 7 fees to pay a trustee in charge of the bankrupt account. 

* Where do I go to file my bankruptcy claim?

Bankruptcy cases are handled by the federal court systems in every state. This usually means that the bankrupt party will need to give the bankruptcy paperwork to the state courthouse, usually in a state’s capitol city. Your bankruptcy attorney should know the address and rules regarding whether or not paperwork can be sent by mail or if paperwork needs to be given in person.

* What happens after filing for bankruptcy?

Immediately after filing for bankruptcy, the court system will send out notification to creditors of the pending bankruptcy case. From this point on, creditors are considered to have a "restraining order" by the debtor and are not allowed to contact the debtor requesting payment. Depending on the type of bankruptcy, a hearing will be scheduled and deadlines will be set for creditors to file a claim and attend the hearing. Of course, all of the proceedings from here are dependent on the type of bankruptcy filed, so it is important to be in contact with your bankruptcy attorney who can more readily answer these questions.

Balance Transfers

As another way to get your business, many card issuers offer balance transfers. This can give you some leverage as a consumer and a opportunity to save some interest. Most credit cards offer a 0% APR for 6 to 12 months with no transfer fees. This is sometimes referred to as the teaser rate.

A balance transfer can be a good way for a you to consolidate debt. You can take your outstanding balance on one or two or more cards and transfer it to a card with a lower rate. Once approved, you would have all your payables on one credit card and essentially had taken two or more interest rates and transformed them into one lower rate.

If you want to carry on a balance, look for the credit card that offers the best interest rate or the annual fee offer. However, if you intend to pay for the credit every month, then look on the one that offers the lowest interest rate. Take note of the new rate after the introductory offer is over. Is it going to higher than what your have now? Are there any other fees involved? Make sure. Also does the introductory offer apply to balance transfers and purchases?

You can choose the credit card that offers the lowest annual percentage rate (APR). APR's could either be a "fixed" or a "variable" rate. Fixed rates do not change as the name implies but is higher. Variable rates changes depending on the economic trends. I usually avoid anything that's variable but you should explore your own options carefully. This is to be taken into consideration if you're deciding on carrying a balance and for how long.

Other factors involved in your decision for a balance transfer might be the rewards (reward points)or cash back a card offers. You may want to look into something you purchase often, like airline miles or gas rebates if you drive more than usual. Other cards even offer cash back for paying home utilities and mortgage, like the Citi® Home Rebate Platinum Select® MasterCard®. There is much competition for your money and if you take time to explore your options, you can turn some disadvantages on your present credit card balance back your way.