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Using a Bankruptcy Attorney: What to Expect

A bankruptcy filing can be legally complicated, as well as time-intensive. In many cases, your first big decision and major time commitment will be finding a bankruptcy lawyer.

While you may already have an attorney from your business, estate planning, or family matters, they might not be experienced in bankruptcy.

More often, you will have to find an attorney from scratch. This can be well worth the effort because lawyers who practice exclusively in bankruptcy tend to do it quickly and cheaply.

Using a Bankruptcy Attorney

It may feel counterintuitive to pay attorney's fees for help with your financial crisis. But professional assistance can mean the difference between a setback and a total loss when you have serious debt issues.

You can have a free consultation with most bankruptcy attorneys to explain your situation and see if your personalities are a good fit.

There is no legal obligation to have an attorney when you go into bankruptcy. However, bankruptcy law is a complicated and ever-changing system. Having knowledgeable assistance is a practical necessity.

An experienced bankruptcy attorney can help you:

  • Preserve valuable assets and explain your state-specific exemptions
  • Possibly avoid bankruptcy altogether
  • Reduce future negative outcomes and impacts of a bankruptcy action
  • Avoid pitfalls and common mistakes
  • Exercise your rights when applicable
  • Create a fair payment plan for debt
  • Explain options for informal debt relief actions
  • Communicate with your creditors
  • Establish a debt "workout" agreement
  • File paperwork for Chapter 7 and Chapter 13 bankruptcy processes
  • Ensure you pay the correct filing fees
  • Discuss foreclosure and future credit report options
  • Tell you what to expect in bankruptcy court and bankruptcy trustee appointments
  • Pursue your legal rights and protect your interests zealously

Having a bankruptcy attorney is increasingly important. In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act.

Among other changes, this law modified existing bankruptcy procedures. It shifted responsibility for providing documentation and proving your inability to pay debts to the bankruptcy debtor (you).

Choosing Your Attorney

You will want to meet with any attorney you consider hiring to see if you and the attorney can work together in general.

You will really be interviewing the attorney just like you would interview a job applicant. Some bankruptcy attorneys run their offices like an assembly line, which is not necessarily bad. It means they won't be wasting your time either.

You need to decide whether the style of any given attorney is one with which you can work. Select the attorney with experience and an approach that fits well with you.

Questions Your Lawyer Will Ask About Bankruptcy

To do the best possible job on your behalf, your attorney needs your input and cooperation.

At your first meeting with your attorney, you should be prepared to provide the following information and answer important questions. If you are filing with a spouse, be ready to share their information as well.

General Questions

  • Will this be a joint bankruptcy petition?
  • What county do you live in?
  • How long have you lived at this address?
  • List previous addresses in the last two years
  • What is your Social Security number?
  • List all banks with which you have an account, and indicate whether they are checking or savings and the approximate balance
  • List all credit cards you have and the approximate balance
  • Do you have any shared bank accounts?
  • Have you had a safe deposit box in the last two years? (If yes, note the location and the contents of the safe deposit box)
  • Are you holding valuable property that belongs to another person?
  • Have you had a prior bankruptcy? (provide the case number, date filed, debts dismissed, and outcome)
  • Is any of your property in the hands of a receiver, trustee, or another liquidating agent?
  • Are you suing anyone right now?
  • Have you been involved in a workers' compensation or personal injury lawsuit where you expect to recover money?
  • Have you had any repossessions in your past history?
  • Have you suffered any losses by fire, theft, or gambling during the last year?

Family Questions

  • Are you single, married, or divorced? How long (if married or divorced)?
  • Have you used any other name(s) in the last six years?
  • What are the names and ages of minor children living with you?
  • What amount of child support or spousal support (alimony) do you pay?

Debt Questions

  • Do you owe any money to the Internal Revenue Service? Which tax years?
  • Do you owe any money to state tax authorities?
  • Do you have any unpaid student loans?
  • Do you anticipate a substantial change in your expenses in the immediate future?
  • List the years in which your debt was incurred
  • Provide estimates for all monthly expenses:
    • Rent, mortgage, and real estate taxes
    • Electric, gas, trash, and water
    • Home maintenance
    • Life insurance and health insurance
    • Phone, cable, and internet bills
    • Auto insurance, gas, or car expenses
    • Homeowner/renter insurance
    • Food
    • Medical bills or items
    • Entertainment
    • Education
    • Clothing budget and laundry
    • Childcare

Employment Questions

  • Who is your current employer?
  • How long have you been at your current job?
  • How often are you paid?
  • What is your income per pay period (gross and net income)?
  • Have you received income from any other source than your job last year (for instance, Social Security, child support, workers' compensation, etc.)?
  • What amount of income have you made at your job in the past two years?
  • If you have more than one job, list year-to-date and two-years prior income information.
  • What amount of income have you received from other sources in the last two years?
  • Will you be eligible for a tax refund this year? How much?

Business Questions

  • Have you been in a partnership with anyone during the last six years?
  • Have you been an officer in a corporation within the last six years? (If yes, give the name of the business and/or corporation, dates of operation, nature of business/corporation, and your approximate yearly income from the business.)
  • Have you given away, sold, or transferred any valuable item (over $1,000) in the last year? (If yes, state the nature of the sale or transfer, what was transferred, the price, and when it occurred.)

Documents Your Bankruptcy Attorney Needs

Once you hire an attorney to assist with your bankruptcy case, it is important to provide the information they need to best advise and represent you.

Although every person's financial life is different, some basic documents are virtually always helpful in better understanding your financial position.

Examples of important documents include, but are not limited to:

  • Bank statements
  • Your most recent bill from each creditor
  • A record of your most recent payments on cars, real estate, and student loans
  • Bills or invoices for purchases in the past year
  • Files from previous litigation, including judgments
  • Files from previous attorneys
  • Divorce decrees, child support orders, and information about other financial obligations
  • Canceled checks for any undocumented expenses
  • Mail or email correspondence with creditors
  • Insurance policies
  • Tax returns for the past three years
  • Vehicle titles
  • Lease or mortgage documents
  • Promissory notes
  • Proof of any other debts you owe or money owed to you

Bankruptcy cases can involve multiple people and creditors and take years of litigation. It can be a personal comfort to have someone who understands the system and is on your side.

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