A bankruptcy can be very costly. Each year, thousands of people find themselves unable to pay their debts, but also unable to pay for a bankruptcy filing; therefore, it’s no surprise that attorney fees compose the majority of bankruptcy costs. While filing for bankruptcy alone can help some debtors save, it’s a significant undertaking. Most people fare much better when they file with a lawyer’s help.
The Means Test
When considering filing for bankruptcy, the first thing to do is to take a means test. The test determines whether the filer is eligible for chapter 7, which allows many debts to be discharged. Filers must answer questions about debts, assets, income, and the size of the household. If few assets are present and the household income is below the state median, the debtor can usually be approved for chapter 7.
Credit Counseling and Reporting
The filer’s next step is to get their credit reports from the three credit bureaus: TransUnion, Equifax and Experian. All three reports are needed because most creditors don’t report to all three bureaus. If a debt isn’t listed on the petition, it won’t be eliminated with a chapter 7 bankruptcy. The filer must complete a financial literacy and money management course from an approved credit counseling agency.
Paperwork
Filing out bankruptcy forms is the most time-consuming part of the process, and a lawyer can help speed things along. Once the requisite forms are completed, they can be submitted by mail or in person. A lawyer will advise clients to promptly respond to correspondence from the court-appointed trustee, as failure to do so can get the entire case dismissed.
The Creditors’ Meeting
Bankruptcy filers are required to attend a creditors’ meeting. Although the creditors won’t likely be present, the court-appointed trustee will ask questions about the case. With a lawyer’s help, the client will answer them accurately and honestly.
Chapter 13
While some can successfully file for bankruptcy without an attorney’s help, there are many exceptions, for instance, if a partnership or corporation is facing bankruptcy, it’s important to hire a lawyer. Those who can’t pass the means test due to high income may have to get chapter 13 instead of chapter 7.
