Choosing a bankruptcy lawyer

Learning your options when your finances are "in the red."
In medieval Italy, when a businessman did not pay his debts, the custom was to smash his trading bench. The term bankruptcy comes from the Italian for broken bench, "banca rotta."

Today, U.S. bankruptcy law is a federal court process designed to help give debtors, both consumers and businesses, a sensible way to begin new economic lives. Ideally, hiring a bankruptcy attorney will help eliminate and repay debts under a bankruptcy court's protection.

There are two types of bankruptcy:
  • Liquidation (Chapter 7)

  • In a liquidation bankruptcy, the debtor asks a bankruptcy court to wipe out your debts. In exchange for the discharge of debts, your nonexempt property would be sold and the proceeds would be used to pay off your creditors.

    This may not be worthwhile if you can't wipe out enough debt (not every kind of debt qualifies) or if you have to sacrifice too much property.

  • Reorganization (Chapter 11, 12, or 13)

  • In a reorganization bankruptcy, the debtor files a plan with the court that outlines a proposal for repaying his creditors. Some debts must be repaid in full; for others, only a percentage of the balance must be repaid. Others aren't paid at all.

    The amount a debtor must repay depends on the amount of property he owns and the types of debts he owes. If you have secured debts (current car notes, current mortgage payments, student loan debt or tax debt) under $871,550 and unsecured debts under $269,250, you can file for Chapter 13.

    Consumers with debts in excess of the Chapter 13 debt limits and businesses can file for Chapter 11 — an intricate, time-consuming and expensive process primarily used by businesses.
When do I need a bankruptcy lawyer?

    Before deciding to engage an attorney, it's advisable to spend some time carefully and honestly evaluating your financial situation, possibly with the help of a qualified financial professional.

    Hiring an attorney may help during several stages of the bankruptcy process.

    • He may be able to negotiate with creditors to settle your unsecured accounts (for example, your credit cards, utility bills, personal loans and business debts) for less than the balance owed, giving you an alternative to bankruptcy.

    • He can help you evaluate your options when deciding which type of bankruptcy to file. If you face numerous claims and have significant assets at state, a bankruptcy lawyer can provide specific help in setting assets in order and handling the files.

See these profiles of bankrupty lawyers on

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