Introduction: Do I need a bankruptcy attorney?
New bankruptcy laws have made filing for personal bankruptcy not only more expensive, but also more complicated. Bankruptcy attorneys now have to spend more time on means testing and validating the accuracy of each client's bankruptcy filings.
It is not required that you hire a bankruptcy attorney prior to filing for personal bankruptcy, but the changes in the law have made completing bankruptcy on your own more complicated. A qualified bankruptcy attorney can make sure your financial situation is evaluated accurately, help schedule all court appearance and complete all necessary bankruptcy documentation.
Chapter 7
Chapter 7, otherwise known as "liquidation" or "straight bankruptcy" is generally the simplest and quickest and is available to individuals, married couples, corporations and partnerships. A trustee appointed by the court gathers and sells your nonexempt property. The proceeds from the sale pay your creditors. You're able to keep any "exempt" property.
Chapter 13
When someone files for bankruptcy under Chapter 13 of the Bankruptcy Code, their aim is to have the opportunity to repay some or all the debts in their name, in better terms, i.e. lower or no interest. Unlike Chapter 7 which involves liquidation of assets, this process involves restructuring debts which allows the debtor to use whatever income they may have in the future to pay off the creditors.
Filing Chapter 13 Bankruptcy is thus applicable for a debtor who has a regular income, and thus can afford to request for such adjustments or reductions.
The United States Bankruptcy Code gives the debtor a ceiling of 5 years within which the creditors must be paid back. While the attorney will safeguard your interests, the entire process is carried out under the supervision of the courts.
Chapter 20
A Chapter 20 bankruptcy is the strategy of filing a Chapter 7 bankruptcy to discharge unsecured debts and immediately following up with a Chapter 13 after debts have been reduced. The 2005 Bankruptcy Reform Act limits Chapter 20 filings by placing a general limit on success bankruptcies.
Currently, a Chapter 7 bankruptcy can be filed once every eight years, and a Chapter 13 can be filed only after three years have passed from the closing of a Chapter 7 case. Still, bankruptcy seekers attempt to circumvent these restrictions.
