Table of Contents
- The Intricacies Of Bankruptcy Law In The US
- What To Look For In Bankruptcy Lawyers
- Mistakes Made By Individuals While Filing For Bankruptcy
- How To Hire Bankruptcy Lawyers
- Say No To Pro Se (Without An Attorney)
- How Can Individuals Become Bankruptcy Lawyers?
- Bankruptcy Lawyer Salary And Job Outlook
- Essential Skills Possessed By Bankruptcy Lawyers
- How To Avoid Bankruptcy
- Should You Consult With A Bankruptcy Lawyer?
According to various statistics, the number of bankruptcy cases filed each year is increasing at an alarming rate. In the United States, more than 1.5 million individuals are filing for bankruptcy cases annually. After an individual has filed for bankruptcy due to insurmountable debt; which is the most popular reason for bankruptcy, or any other reason, he/she will confide with bankruptcy lawyers for all legal battles and counsel.
More specifically, these specialized attorneys provide legal advice, while handling all the paperwork throughout the duration of the case for their particular clients. Typically, this type of attorney practices in each of the two: consumer bankruptcy and commercial bankruptcy. The latter is a complicated practice domain that includes various pitfalls, however, the former deals only with individuals and creditors which is why it can be deemed as simpler.
The Intricacies Of Bankruptcy Law In The US
During bankruptcy, individuals yearn to have their debts released or modified into friendlier terms by the courts. After bankruptcy has been declared by an individual or on an individual through a bankruptcy petition, various proceedings arise in court on behalf of said individual.
These proceedings include:
This is a chapter of the U.S. Bankruptcy Code that takes the form of a petition filed, ordering the individual debtor, who has been declared bankrupt due to not being able to repay his/her debts, to liquidate his/her assets and conclude or discharge debts.
This is another branch of the U.S. Bankruptcy Code which is also referred to as a petition filed. This filed petition pertains to a business rather than an individual. Under this petition, a business required to reorganize its assets and liabilities, moreover, settling or disposing of its debts is also given emphasis.
Chapter 13 is a petition filed that puts forward the case of an insolvent debtor who may ask the court to grant him/her some additional time for paying debts; given the debtor has a steady income.
It is of paramount importance that a bankruptcy lawyer is well-versed in all of these intricacies and petitions, to be effective.
What To Look For In Bankruptcy Lawyers
Now that it is understood what bankruptcy and bankruptcy law are, it is extremely necessary to know what to expect from bankruptcy lawyers. Perhaps, this is the most crucial piece of knowledge to possess about everything related to bankruptcy because an individual who is going through a stage of bankruptcy is acutely vulnerable, and cannot afford mediocrity or an ill experience with a lawyer due to a lack of knowledge.
A bankruptcy lawyer will smoothen out the process of filing for bankruptcy for their clients. This process can be a daunting experience, to say the least; since there is a lot of paperwork involved, and understanding to be done.
First and foremost, your attorney should be filled to the brim with competence. Your attorney should be having the necessary skill set to pursue your case further and a malleable thought process as well, to mend and bend with any vivid situation. There are several details of a bankruptcy case that have to be deeply checked and analyzed by your attorney since these details branch further into several other factors worth thinking about. Some of these details include:
- If in case the bankruptcy trustee will auction off any of your property
- If you are the owner of a small or medium-sized business
- If there is the involvement of bankruptcy litigation.
Secondly, experience is key as attorneys without the proper experience might be unaware of the vast array of options available to their clients, which would lead to a disastrous situation for the clients as their attorneys might not end up brokering the most fruitful bankruptcy plans.
An attorney who has prepared, aided, and helped many clients through their bankruptcy journey can prepare you in a better manner whilst maximizing the protection of your assets and minimizing the negative effects such as financial loss.
Another crucial component that is expected in a sound and efficient attorney is that you should expect potent legal advice from their end. In the initial stages of your new work relationship with your attorney, you should expect your attorney to let you know whether opting to file for bankruptcy would be your best option or not. If it does prove to be your best option, you should also definitely learn from your attorney through his advice what pitfalls you can expect during the bankruptcy process if your case involves any complications or dangers. Last but not the least, your attorney should guide you on whether Chapter 7, Chapter 13, or any other type of petition will help you in achieving your financial aspirations for the future.
Next, you should expect your attorney to prepare and file all of your paperwork that is relevant to the impending bankruptcy case. During filing for bankruptcy, you are required to fill in tediously lengthy forms. Almost all bankruptcy lawyers have specially designed software to prepare, sort, and file your case with the required paperwork in the court. Your lawyer must go over all the forms you have provided which include all of your financial information, such as assets, income, expenses, and debt information. A thorough check will be done by the lawyer for accuracy purposes too. If your lawyer does not know the local rules of filing procedures and deadlines, you could face a halt in the process and even dismissal of your case.
Finally, after you have received advice from your attorney and all of your documents are ready and filed, debtors, along with their attorneys, must be present at an obligatory hearing known as the 341 meetings of creditors. You can also expect your attorney to represent you in these particular hearings: Chapter 13 confirmation hearings, Chapter 7 reaffirmation, and other hearings.
Mistakes Made By Individuals While Filing For Bankruptcy
Bankruptcy is a tiring, complex procedure and filing it on one’s own intuition, without professional help, can prove to be a disastrous situation. This point again proves the importance of bankruptcy lawyers and how useful they are in easing out this treacherous process. Here are some of the common mistakes made by people, for your learning.
Choosing The Incorrect Type Of Bankruptcy
As mentioned above, there are several types of bankruptcy filings, including Chapter 7, Chapter 11, and Chapter 13. What follows in terms of the processes after filing for bankruptcy is different under each category.
For example, in Chapter 7, your nonexempt assets will be completely liquidated to pay your creditors. Meanwhile, in the other 2 chapters, you will be entered into a payment plan of paying back your debts in the next 3 to 5 years.
Bankruptcy lawyers specialize in this type of law, hence they are your best choice. Such is the risk associated with choosing a type of bankruptcy filing that if you opt for an incorrect one, your whole case could be dismissed.
Repaying Debts To Friends And Family
Under the law, every creditor is to be treated equally. If you show preference to your close ones by delaying the repayment of debts to other creditors of yours and paying your close ones earlier, you will be indulging in preferential treatment. This unfair practice might bring you into trouble with the law.
Adding Credit Card Debt Just Before You File For Bankruptcy
If you are completely aware of the fact that you are going to be bankrupt soon, and that you have to file a bankruptcy case as well, you have to remain cautious for the next 75 days because any purchases made in these 75 days through credit lines of any sort will certainly be used against you in the courts.
This is because credit companies will be well aware of your current financial situation after you file bankruptcy, and will sue you in your bankruptcy hearing for purchasing anything on credit during those 75 days before you filed for bankruptcy. This is because it is a fact that it will not be possible for you to reasonably pay back any credit you took, on the verge of bankruptcy.
Filing Too Close To Your Wedding
If you file for bankruptcy too close to your wedding, not only will this add complications to your file after marriage, It will also cause your spouse’s income and assets to be involved and accounted for. More dangerously, your filing could be canceled due to an exorbitant change in your financial information.
Another important thing to keep in mind is to never file for bankruptcy if you are expecting to obtain an enormous sum of money; for example, an inheritance. This is because after you receive this enormous amount if it is too close to your filing, you might have to give the full amount to your bankruptcy trustee.
How To Hire Bankruptcy Lawyers
After detecting, understanding, and listing down the critical qualities that make a bankruptcy attorney efficient at what he/she does, and unearthing certain aspects expected of your respective attorney, it now turns to understand how to approach and hire a bankruptcy lawyer.
It seems an uninteresting and irrelevant discussion as to why there is so much stress on hiring an attorney, it must be very easy to do so, right? Well, contrary to the popular belief, it is an exhausting procedure to search, shortlist and select just the right attorney for you, and it should be given its due diligence because choosing the right attorney will give you a strong head start, not to forget that you will be already short on time and financial resources as well. Hence, you need to make a weighted and thoughtful decision.
Where Shall I Look For An Attorney?
After filing for bankruptcy, it is advised to immediately start looking for an attorney because bankruptcy lawyers who are good at what they do are booked in advance, resulting in a short supply of proficient bankruptcy lawyers. Now we shall talk about the process of finding an attorney.
A way to find out that an attorney is devoted to bankruptcy law practice is going through the National Association of Consumer Bankruptcy Attorneys (NACBA). After doing this, go inquire about the people you know who have also gone through a similar experience, or check the internet.
A lawyer present on the internet is the norm now. You will find thousands of lawyers’ websites listed on the internet; hence, the possibilities for you are quite literally endless. To make things easier for you, search engines and the majority of lawyers’ websites have ratings attached to them helping you easily opt for the best lawyer through this gift of technology.
Since you are finding a suitable attorney from a huge list of bankruptcy lawyers to provide you with a service, it would be wise to interview them thoroughly like you would do so with any other job applicant. A consultation with an attorney you are considering hiring to conduct the interview is vital.
During the interview, inquire about the attorney’s background, relevant experience, achievements, or certifications they may enjoy. If they hush you off, answer one-liners, and show any sort of annoyance, it is advised that you should find another lawyer because it will be expected of them to treat you with the same disrespect during your bankruptcy process.
Say No To Pro Se (Without An Attorney)
‘Pro se’ refers to the process of filing for bankruptcy without the aid of an attorney, or in the absence of an attorney. Filing ‘pro se’ has numerous drawbacks for you. If you file for bankruptcy independent of an attorney, you will still be adhering to the same rules and standards as an attorney by all courts.
The obvious reason why people file ‘pro se’ is because they find lawyers to be unnecessarily expensive, or they are unable to afford the fees of hiring a lawyer. Another reason for individuals opting for ‘pro se’ is that individuals believe hiring attorneys will create unnecessary complications in the process. However, going down the ‘pro se’ route, whilst filing for bankruptcy, is not a bright idea.
Bankruptcies are already utterly complicated, and the guidance provided to you by an attorney is unparalleled to your own intuition when it comes to the know-how on everything related to bankruptcy since attorneys are professionals, having year’s worth of experience and practice. It is a common occurrence for people filing ‘pro se’ to make several mistakes such as ignoring to provide a source of income. Mistakes like this, and many more, could cause your case to be dismissed by the courts; this is probably the last thing a bankrupt individual might want.
To conclude, bringing an attorney on board with you to file your bankruptcy case will make the process undoubtedly straightforward for you. Spending the money on lawyer fees would be a wise investment, even if you have significant amounts of knowledge on bankruptcy. This is why bankruptcy lawyers are so crucial in today’s world.
How Can Individuals Become Bankruptcy Lawyers?
Practicing Bankruptcy Law
Bankruptcy lawyers practice on various diversified fronts. Some work as in-house advisors for financial corporations, such as banks, credit card companies, and other lending corporations. However, most bankruptcy lawyers apply themselves to law firms. Lawyers who practice bankruptcy law on behalf of consumers in individual bankruptcy often work for small firms or their own practices.
How Can I Get A Job In Bankruptcy Law
Becoming a part of the bankruptcy lawyers’ fraternity requires you to attain a bachelor’s degree, and also to be inducted into a law school. You will have to complete a Juris Doctor (J.D). Degree; completing this degree will cost you around two and four years to complete, in terms of time.
Admission into the many renowned law schools in the United States is a very challenging task because of high competition. This is why you will have to start your preparations early on; other than that, completing law school applications, then completing the Law School Admission Test (LSAT) application, and finally preparing for the (LSAT) is an excruciating task for many. It is advised to plan and start as early as you can to gain a competitive advantage.
After being accepted into a law school, your first year will typically concentrate on universal and broader courses such as legal writing, property law, and constitutional law. After completing your core courses in your initial law school year, you will be provided with the opportunity to opt for specializations that best suit you and your aspirations for the future; one of these many specializations is bankruptcy.
More specifically, if you want to pursue bankruptcy law, you will be required to study courses such as creditor’s rights, debtor’s rights, income taxation, and negotiations, et cetera. It is highly recommended to partake in moot sessions to obtain hands-on experience throughout your academic years.
After receiving your law degree, it is mandatory to sit for the written bar exams of your particular state and pass them. After passing this exam, you will be presented with a license for practicing law.
Bankruptcy Lawyer Salary And Job Outlook
Due to a deteriorating economy, the debt problem has been growing and becoming more visible as every day passes. Financial burdens such as increasing inflation rates, unemployment, salary cuts, and cutbacks have led to numerous people not being able to afford to pay back their debts.
On top of all that, today’s economy all over the world is credit-based. Due to the rise in credit consumption, people have been increasingly falling short on repaying their debts because the number of debtors has increased exponentially over the last decade. Hence, people file for bankruptcy in the pursuit of having legal mediation to sort out, if not all, at least a few of their financial troubles. All of the abovementioned has led to a substantial increment in the demand for bankruptcy lawyers.
The U.S. Bureau of Labor Statistics (BLS) states that the employment levels of bankruptcy lawyers rose by about ten percent between 2012 and 2018. ZipRecruiter, a job website, claimed that the mean annual salary of bankruptcy lawyers is in the ballpark of $71,888. However, these salaries vary with experience, geographical location, and employer.
For example, Bankruptcy lawyers in New York make around $86,296 each year. Remarkably higher when compared to the rest of the country’s average. Meanwhile, bankruptcy lawyers in North Carolina earn about $61,076 on average, annually.
Detrimental economic conditions have caused the demand for bankruptcy lawyers to surge. During harsh economic periods, almost all bankruptcy lawyers are in high demand. Clients, who are already facing a complete meltdown, will be willing to pay a lot of money to hire the very best.
Essential Skills Possessed By Bankruptcy Lawyers
If you strive to become part of one of the many successful bankruptcy lawyers, you will have to amass some extremely crucial skills. These qualities will help you throughout your litigation journey, preparing you for the worst.
Law is a dynamic field, and anything unexpected can happen at any time. So, it is crucial to have, if not all, at least some of these traits with you if you aim to position yourself amongst the top bankruptcy lawyers of your country.
These virtues include interpersonal skills, cautious and accurate attention to detail, rationale and reasoning, efficient decision-making, the capability to analyze tremendous amounts of data in a short time span, savvy negotiations, being street-smart, and persuasiveness.
How To Avoid Bankruptcy
Filing for bankruptcy is a stressful and consuming time for any individual. It means that an individual who has filed for bankruptcy will go before a judge and publicly exclaim in front of everyone that he or she is unable to pay their debts. Bankruptcy is an ordeal, and the general public always likes to steer as far away from it as possible. If bankruptcy is imminent upon you and you can see no way out, follow this advice as even the smallest actions can cause huge changes.
Live On A Lean Budget
You are trying to sway away from palpable bankruptcy, which means that you cannot afford to be extravagant by any means. Buy staple foods, such as beans and rice. Drink water from the tap. Your primary goal should be to allocate as much money as you can towards paying your debts. This can be only done if you follow a drastic regime of cutting back expenses, religiously. The above-mentioned examples of how to cut costs might seem to be extreme, but drastic times call for drastic measures.
Moreover, if you need assistance or advice on cutting and smartly allocating your budget, help is indeed available from certified counselors who deal mainly in credit management at many non-profit agencies. You need not worry since these services will not cost you a fortune. These services are low-cost, ranging from $25 to $50; even free if someone is unable to afford to pay.
Work Out Negotiations With Creditors
As soon as you comprehend the fact that you will be unable to pay your debts, it is of the utmost importance that you contact your creditors and let them know. This way, although there is no guarantee, creditors might agree to lessen interest rates, lower fees, or provide you with a modified and favorable payment plan.
According to Elizabeth Bauer-Simmons, a credit counselor known for her competence, credit card companies shows higher tendencies to negotiate as opposed to other sectors of the financial market. In many cases, negotiation has been seen to make the difference between filing for bankruptcy and evading it together.
Prioritize Your Debts
Many individuals make the mistake of not going in with a plan to repay their debts. Making random and spontaneous payment decisions in the process. A few do not even keep records of cash flows, which can be detrimental, to say the least. You need to prepare a proper plan for repaying your debts.
The recommended plan of action for you to follow is this: First, carry out your budgeting in a way that allows you to pay for absolute necessities such as food and utilities. After this has been done, you should concentrate on the debt that has the highest interest rate. Pay your minimum for necessities and other debt, and allocate as much money as possible to your highest interest rate-laden debt.
Debt Consolidation Loans Might Not Be The Best Solution For You
A debt consolidation loan consists of a singular loan with one monthly payment. You can pay off your entire debt with this loan. It seems like the best option, an easy way out for many. However, the majority of credit experts say otherwise.
U.S. News and World Report claim that debt consolidation is an indigent decision to go for because it is a shortcut. Individuals feel that they have dealt with the problem, and have surpassed the ordeal of filing for bankruptcy, however in reality they do not solve the problem of financial mismanagement; they just address it.
Moving on, debt consolidation can also end up being a far more expensive option as opposed to even the conventional way of filing for bankruptcy and then adhering to the processes that follow. This is because of the factoring in of interest and fees that span for a lengthy duration of time, as well as money.
Avoid Debt Settlement Services
Debt settlement services are primarily suggested and provided by for-profit companies. These services offer you a chance of conferring a settlement with your creditors for a fee. Consumer Reports claim that these companies ask for 15% of the debt upfront. Also, according to various reports and citations, these services do not provide their clients with much relief in their struggle for regaining their financial health.
Choose Debt Management Services
CBS News talked about how debt management services provided by non-profit organizations are a better option; if you decide to take professional assistance with yourself. Debt management services consist of negotiations with your creditors to lessen interest rates and lower or discard fees. The debt management company, after successfully negotiating with your creditors, requires you to pay the monthly payments which they use to make monthly payments to your creditors.
Debt management is considered the right value for money since fees are excitingly lower than what you pay for debt settlement. In the majority of the cases, you pay around $25 for a month’s subscription.
A debt management services company would also provide you with other services such as financial counseling, teaching you how to do budgeting and preparing a budget, and start saving money.
Should You Consult With A Bankruptcy Lawyer?
Bankruptcy is harsh. It consumes your time, health, and your whole livelihood. After knowing all the perils of bankruptcy, it should be everyone’s moral duty to approach it with great caution. It is highly recommended to consult and employ bankruptcy lawyers on your journey because they truly might be your last hope remaining.
Most bankruptcy lawyers in the market are well-versed in what they do and are great at their jobs. Amongst all bankruptcy lawyers, you would find and interview in the short time you have during your bankruptcy, choose the one with whom you feel the most comfortable while making sure he or she is professional and respectable.
It is essential to know that every bankruptcy case is different, and has its pros and cons. Bankruptcy lawyers are different as well and have distinctively unique styles they work with. To make a well-informed decision about your bankruptcy journey, start step by step, start patiently. Make a list of all bankruptcy lawyers you find to choose the one that is the perfect fit for you. After that, educate yourself on the minutest of details in the whole process. Then, go into the courtroom and bargain on the best possible deal for you alongside your bankruptcy lawyer.