Bankruptcy is a situation where an individual or business is unable to pay off its debts. In such a situation, multiple bankruptcy code chapters can get applied to determine if the individual or entity should be allowed to formulate a payment plan or have all their assets liquidated to pay off the debts.
However, filing for bankruptcy is a lengthy process with numerous regulations determining which type of bankruptcy should get filled. As a result, it is essential to have a bankruptcy lawyer guide you through the process of filing for bankruptcy.
With that in mind, here are four reasons it is essential to hire a bankruptcy lawyer.
Guiding You Through the Bankruptcy Code
The bankruptcy code is a complex set of laws and regulations that govern the filing of bankruptcy. It can be quite a challenge for an individual to grasp the bankruptcy code fully, and thus it is vital to hire a bankruptcy attorney to help you navigate the different chapters of the bankruptcy code.
Additionally, a bankruptcy lawyer will help you understand your situation and provide you with all the viable options you have for filing bankruptcy under the bankruptcy code. Hence, with a seasoned bankruptcy lawyer, the chances of making an error when filing for bankruptcy are minimal.
Assessing Your Financial Situation
A bankruptcy lawyer can assist a company or individual assess their financial situation to determine the best type of bankruptcy to file. Under the bankruptcy code, several chapters govern how a bankruptcy should get filled. However, the most common bankruptcy chapters include:
- Chapter 7 — Involves the liquidation of assets to settle debts
- Chapter 11— Involves reorganizing of an individual or company's finances to facilitate debt repayment
- Chapter 13 — Involves arranging a suitable payment plan that will enable the debt to get settled more easily
Many individuals and companies often make the mistake of failing to include a bankruptcy lawyer during their financial assessment. As a result, they file for the wrong type of bankruptcy.
For instance, a company or individual may opt to file for a Chapter 7 bankruptcy while eligible for bankruptcy under Chapters 11 or 13.
Avoiding Harassment from Creditors
When you intend to file for bankruptcy, your creditors will most likely start harassing you in an attempt to collect their debts. However, the bankruptcy code includes laws against harassment of debtors by creditors. Hence, hiring a bankruptcy lawyer to speak on your behalf to creditors will eliminate any chances of getting harassed by them.
Additionally, when you hire a bankruptcy lawyer, your creditors will no longer have to deal with you directly because all communication will go through the bankruptcy lawyer. Hence, the burden of dealing with multiple creditors round the clock gets transferred to your bankruptcy lawyer. Therefore, it leaves you with an easy mind that can start formulating a solution for your financial troubles.
Negotiating With Creditors
When creditors have sued you for failing to settle your debts, it is up to your bankruptcy lawyer to negotiate on your behalf with the creditors. In most cases, creditors might contest the discharged debt sum if you opt to file for a Chapter 7 bankruptcy, hoping to get paid in full.
In such a situation, instead of liquidating your assets under Chapter 11, your bankruptcy lawyer can negotiate a payment plan with your creditors under Chapter 11 or 13 bankruptcy. Thus, a bankruptcy lawyer can negotiate a new deal under which you get to repay the debts in a more flexible payment plan instead of liquidating your assets to settle the debt.
For more information, contact a local bankruptcy attorney.
