What You Need To Know Before You File For Bankruptcy
When you're an individual that's facing debt to creditors beyond the means of repayment, filing for bankruptcy may be the best option to relieve the immediate burden. Choosing to file for bankruptcy can give you the opportunity to clear your name of debt in a court of law and start over.
But because a bankruptcy hearing is an involved process that requires specific legal applications and judicial motions, there are things you need to know before you decide to file.
Understanding the Basics
Filing for bankruptcy in a court of law happens at the federal level, which eliminates your state's interests in the process. Before you file, there are three types, or chapters, that are applicable to the process:
- Chapter 7: Chapter 7 gives individuals the opportunity to liquidate assets in order to pay a debt. Though this chapter can be filed for voluntarily, it may also be filed involuntarily by a creditor or institution with whom you hold a debt. Specific circumstances may allow you to skirt the mandatory credit counseling that's required within 180 days before filing, but if you file chapter 7, you must not have had a previous bankruptcy filing dismissed in court within the same time period.
- Chapter 11: Chapter 11 applies primarily to partnerships and businesses, allowing reorganization of the assets to accommodate stock holdings and investments. Chapter 11 is applicable to some individuals that are sole proprietors of a business, but assets from both personal and commercial holdings may be included under the filing process.
- Chapter 13: Chapter 13 bankruptcy allows individuals or business owners the opportunity to repay debts over time as long as they receive a regular income. In order to be eligible, unsecured debts must fall below $383,175 and secured debts under $1,149,525, with no dismissals of previous bankruptcy filings within 180 days in court.
Why You Need an Attorney
Bankruptcy cases require a significant amount of time, paperwork, and oversight from a legal counsel that's familiar with the process. Just as any other proceeding in a U.S. court allows you to counsel free of charge, you are entitled to use a public defender when proceeding with bankruptcy and probate cases.
If you elect to hire your own attorney, you can expect to pay up to several thousands in the process, which can exacerbate your situation if you are an individual without holdings or income. But hiring an attorney instead of using a public defender can also help ensure that your assets are appropriated in your favor and that you are exempt from legal fees involved in filing. An experienced bankruptcy attorney may cost you initially, but can give you a better chance at recovering more of your assets and holdings in the process.
To learn more, contact a company like http://wfactorlaw.com with any questions you have.