6 Essential Questions to Ask Your Bankruptcy Lawyer
Bankruptcy provides a consumer or business the ability to reduce, eliminate, or pay debts off over a specified period of time, according to Cornell Law School. A consumer interested in filing for bankruptcy needs to prepare for an initial consultation with an attorney. There are set of specific questions a person considering bankruptcy needs to ask of a lawyer.
Is Bankruptcy the Right Solution?
Bankruptcy should be the last resort for a person with serious financial issues. All other reasonable alternatives need to be explored before a bankruptcy is started.
Discussing reasonable alternatives to bankruptcy needs to be part of an initial consultation with a lawyer. A potential client needs to share what other steps he or she has taken to address his or her debt situation. An experienced attorney will advise if some other alternative to bankruptcy might make sense in a particular situation.
Which Type of Bankruptcy Makes Sense in a Particular Situation?
An consumer needs to discuss with a lawyer what type of bankruptcy makes the most sense. An individual consumer may file one of two different types of bankruptcy cases, according to the American Bar Association. A Chapter 7 bankruptcy permits a consumer the ability to obtain a discharge of most, if not all, of his or her debts. A Chapter 13 allows a person the ability to pay off his or her debts over time, typically five years.
What Happens When a Bankruptcy Begins?
When a bankruptcy commences, the debtor provides the court with a significant amount of financial information. This includes documents like bank statements, income tax returns, income records, and similar types of information.
What Happens to Legal Actions Pending Before a Bankruptcy is Filed?
Directly upon the filing of a bankruptcy petition, the court issues what is called an automatic stay order. This is an order from a bankruptcy judge that requires all creditors to cease attempting to collect debts.
If a debtor is being sued, the lawsuit must pause. The only way a creditor or plaintiff in a lawsuit against a debtor can proceed is to obtain a special order from the bankruptcy court lifting the automatic stay order as to that person or entity.
How Long Does a Bankruptcy Case Take?
The length of a bankruptcy case depends upon the specifics of a particular case. A Chapter 7 bankruptcy can conclude within about 90 to 120 days. A Chapter 13 bankruptcy, because of the payment plan involved, can extend over a period of five years, but no longer.
How Will Bankruptcy Impact a Person’s Credit Record?
A bankruptcy does show up on a person’s credit report for a specified period of time. A lawyer can provide specific information about the impact of bankruptcy on a credit record. On the plus side, most or all of a person’s debts are discharged or being paid off via a court-ordered plan. Thus, a consumer’s debt load is reduced.