3 Questions To Ask A Bankruptcy Lawyer At Your First Consultation
You want to schedule a consultation with a bankruptcy lawyer. However, you probably will also want to ask some questions about the process and how it might apply to your financial situation. Ask these three questions to ensure you'll have a more fruitful discussion about bankruptcy.
Do You Qualify?
You don't want to submit a petition if a bankruptcy lawyer is confident you don't qualify to file. Be sure to check your last two years of tax returns to verify your income level. If your situation has recently changed, such as the loss of a job or reduction in work hours, make sure you know how much the financial impact is. You should also have a ballpark idea of what your overall debt load is and who you owe what to.
What Type of Bankruptcy Should You File?
Liquidation and restructuring are the two main kinds of bankruptcies. Chapter 7 covers all liquidation proceedings, and it allows a judge to discharge a debtor's obligations on most unsecured debts. Unsecured debt is not backed by a real object, such as a house or car. Credit card and utility bills are among the most common unsecured debts in Chapter 7 proceedings.
Chapter 11 and 13 cover most restructuring proceedings. Bankruptcies for businesses and some individuals with millions in debts fall under Chapter 11. Must individuals trying to restructure their debts will use Chapter 13, though.
A bankruptcy restructuring involves the debtor proposing a payment plan. Usually, this involves a lower amount than what the debtor owes. In return for promising to repay the lower figure, the debtor also promises to complete the payments within three to five years. If they complete the plan, the court will discharge the remaining debts.
How Long Will the Process Take?
People are often shocked by how quickly bankruptcy moves once they petition the court. A bankruptcy lawyer may slow things down a bit before filing just to give you some breathing room. Chapter 7 cases can be done within weeks if the court docket allows it. You will need to get all supporting documentation, such as tax filings and pay stubs, to the court not long after you file. Chapter 11 and 13 cases tend to take longer, but approvals usually land within a few months if the courts are moving quickly and the creditors have no objections.
Once the court discharges your debts in Chapter 7, that's the end of the process. Given the role of the payment plan in Chapter 11 and 13 cases, these take however many years the court allows to execute the plan.
For more information, reach out to a company such as Martinez Law Firm.
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