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8 Bankruptcy Myths You Should Stop Believing

1).  Bankruptcy will haunt me forever – NOT TRUE

Chapter 7– A bankruptcy filing appears on a credit report for 10 years from the filing of a bankruptcy petition.  Despite the reporting on your credit report your access to credit will come back very quickly, especially if you take some easy steps post discharge (See our blog post about steps to take post discharge to rebuild your credit).

When a Chapter 7 Case is filed your name and address are public record and notice is sent to the credit bureaus about the case filing.  Car creditors especially will use this information to send you advertisements to purchase a vehicle the instant a case is filed. Our firm recommends that, if possible, you avoid purchasing a vehicle for about one year after a bankruptcy discharge.  Instead you should focus on obtaining a credit card.  Many of the major credit card companies will issue you a credit card with a small limit the instant a Bankruptcy is discharged.

If a Discharged Chapter 7 Debtor uses this credit line responsibly (never more than 30% of Credit Limit used, pay off in full end of the month) for approximately 1 year after their discharge, most Discharged Chapter 7 Debtors will qualify for a vehicle loan at a decent interest rate — less than 10%.

Federal Housing Administration guidelines generally dictate post discharged mortgage financing even on those loans that are not guaranteed by the FHA. This means that most Chapter 7 Discharged Debtors will be able to refinance a mortgage, purchase a new home, upgrade an existing home, etc 2 years after their discharge.  (FHA Guidelines Change so Please Speak to a Qualified Loan Broker for more information).

Chapter 13– – A bankruptcy filing appears on a credit report for 10 years from the filing of a bankruptcy petition. A Chapter 13 Bankruptcy lasts for between 3 and 5 years depending on a Debtor’s income and factual situation. The time that the filing appears on your credit report starts to accrue at filing so once the plan is complete and discharge is entered the bankruptcy should show on a credit report for approximately 5-7 more years depending on the length of the Chapter 13 Plan.

Most Debtors find that upon completion of a Chapter 13 Bankruptcy that access to credit is not difficult.  I have had clients who have immediately purchased new vehicles, homes, etc. It is even sometimes possible, with court permission, to purchase a home or vehicle while a Chapter 13 Case is active.  Every client is different, and you must take steps to ensure your credit and payments to creditors and trustee are in order during your Chapter 13 case to be able to hit the ground running upon completion.

2).  A Debtor’s Credit Score will never recover – NOT TRUE

Chapter 7 – Most clients find that if post discharge credit is used responsibly that their credit score has recovered to better than the minimum required by the FHA, 620, to purchase a home within 2 years of a discharge. Most clients find that the biggest improvement to their credit score comes just after discharge, mere months from the date the case was filed.  In many cases, my clients have reported that their Credit Score improved while they were still in the Chapter 7 Bankruptcy.  This is notable considering a Chapter 7 bankruptcy typically only lasts approximately 4 months.

Chapter 13 – Most clients find that their credit score has recovered to levels sufficient to finance homes, vehicles, etc. within 90 days of the discharge of their case.

3).  I’ll never be able to finance anything again – NOT TRUE

There is a pattern emerging here to use of credit and its misnomers in relation to a bankruptcy filing.  In both Chapter 7 and Chapter 13 contexts this is simply not true.  For more information see numbers 1 and 2 above.

4).  There is not much difference between Chapter 7 and Chapter 13 – NOT TRUE

A Chapter 7 Bankruptcy is a Liquidation bankruptcy.  This means that all of your NON-EXEMPT property is liquidated, and the funds used to pay your creditors.  Texas has VERY liberal exemption laws in comparison to many other states. Most people who own average property will not have to liquidate ANY assets. A Chapter 7 case lasts about 4 months from the date of filing until a discharge is granted.  There is no ability to reorganize in a Chapter 7 meaning that there is no structure to come current on a vehicle or home if you are behind on payments on a car or house note.  Most Chapter 7 debtors file bankruptcy to get rid of unsecured debt (credit cards, medical bills, payday loans, etc.)

Consequently, a Chapter 13 bankruptcy is a repayment and reorganization.  This means that some of your creditors will be repaid at least in part if not in whole. If you own non-exempt property and do not want to lose it in a Chapter 7 a Chapter 13 gives the alternative of paying into your plan the value of said non-exempt property for the benefit of your creditors, but allows a Debtor to retain the property in their possession. More commonly a Chapter 13 is filed to reorganize and repay debts including, but not limited to, mortgage arrears, vehicle arrears, Federal Tax debts, and property tax debts.  Chapter 13 bankruptcy allows a Debtor to retain those assets and continue to use them without fear of foreclosure or repossession. Upon completion of a Chapter 13 Plan the amounts that were behind upon commencement of the case have been repaid and the debt will be contractually current if not paid in full.

5).  I’ll lose my house if I file for bankruptcy – NOT TRUE

Chapter 7 – Presuming you are current on your mortgage payments, do NOT want to give up your house, and you meet/ met in the past the requirements to have a homestead exemption with the County Appraisal District on the property and at least have an intention to return if you are not currently living in the property, this is not true.

Chapter 13 – Presuming you do NOT want to give up your house, and you meet/ met in the past the requirements to have a homestead exemption with the County Appraisal District on the property and at least have an intention to return if you are not currently living in the property the property is exempt from your creditors and you will not lose it in a Chapter 13.  A Chapter 13 also adds the added ability to reorganize and repay arrears if you are not current on your mortgage payments, so you do not even have to give up your home in a Chapter 13 Bankruptcy if you are behind on the payments.

6).  I can get rid of all of my debts with Bankruptcy – NOT TRUE

Not all debts are dischargeable in a Bankruptcy proceeding. Examples of non-dischargeable debts include, but are not limited to, most student loan debt, certain tax debt (specifically if a tax return was not timely filed, or falls outside of the dischargeability provisions of the bankruptcy code), debts obtained through fraudulent pretenses, etc.

7).  Bankruptcy is a personal failure – NOT TRUE

No Debtors’ financial situations are the same, but many Debtors find themselves in bankruptcy court due to circumstances beyond their control. A major medical event, loss of income, divorce, separation, etc are some of the circumstances that many of my clients’ experience leading up to their filing.  Many successful individuals have personally or had their businesses file for Bankruptcy.  The Texas Rangers, American Airlines, Trump Hotels and Casinos Resorts, Larry King, Walt Disney, 50 Cent, and Willie Nelson have all filed for bankruptcy protection.

8).  I don’t have enough money to pay a lawyer, but I can file bankruptcy myself – NOT TRUE/ TRUE

Our firm offers flexible payment options with as little as $300.00 required to get the process started.  However, the question here is a question of prudency.  Bankruptcy is one of the most complicated areas of law.  A simple Bankruptcy Petition and Schedules consist of approximately 100 pages and several different documents that must be filed. Simple mistakes in the voluminous paperwork can result in a case being thrown out.  An Attorney knows the deadlines that must be met as well as how to draft and file the correct paperwork.  According to Ed Flynn of the American Bankruptcy Institute 96.2% of cases filed through an attorney were discharged.  By contrast, people who represented themselves were successful only about 66.7% of the time.  Those statistics are even more stark in Chapter 13 cases.  Debtors who represented themselves in a Chapter 13 were successful just 2.3% of the time versus those who retained an attorney were successful approximately 41.5% of the time.

 

 

Does a Bankruptcy Stop a Lawsuit?

Yes.

When a Debtor files for Bankruptcy the Automatic Stay described in Title 11 U.S.C. §362 goes into effect instantaneously without further action of the Court.  The Automatic Stay is an injunction that is automatically entered by the Court upon the commencement of a Bankruptcy Proceeding. The Automatic Stay disallows any further collection attempts against you that do not go through the Bankruptcy Court first.  This means that all collection actions must stop including the continuation of a pending lawsuit without further order of the Bankruptcy Court.

Most of the time when a Bankruptcy is filed a Debt Collection Lawsuit is non-suited.  This means essentially that the case has been dismissed because the Bankruptcy prohibits any further proceedings.

When a Bankruptcy is completed the Court will enter a Discharge.  The Discharge means that your legal liability to pay any pre-petition debt has been extinguished.  In the context of a pending lawsuit, the underlying debt has been extinguished leaving nothing to renew/ or continue proceedings against.  Further, the Discharge order is a permanent injunction of the Bankruptcy Court that prohibits collection of pre-petition debt. If a pre-petition Creditor were to continue its collection efforts, including the filing or continuation of a lawsuit, you would have additional remedies against the creditor in Bankruptcy Court for violating the Discharge Order.

If I am married do I have to file Bankruptcy with my spouse?

No, you do not have to file Bankruptcy with your spouse.  The Bankruptcy code allows for a married person to file and individual case, and your spouse would become what is termed a “non-filing spouse”.  However, you may need to provide the Court with some of their information including all of their income received in the last 6 months.   This is because the Bankruptcy Code requires you to report all household income for the 6 months prior to filing.

In other words, while a spouse is not required to file a case with another spouse, they will be required to furnish certain information for the case filing specifically their income and expenses.

My home has been foreclosed or is about to be foreclosed upon and I do not want it back/ want it back, should I file for bankruptcy?

Maybe, depending on the advice of your bankruptcy attorney.

When a home is foreclosed upon in Texas, it must be sold at public auction on the Court house steps. This is true for judicial and non-judicial foreclosures alike.  Judicial foreclosures (rare) require an added step of receiving a Judge’s blessing before it is posted.   All foreclosure sales occur on the first Tuesday of every month on the Court house steps.

A public auction usually results in a sell that is significantly less than the value of the home versus if it were sold through traditional means.  This means that most Debtors who have a home foreclosed will owe what is called a deficiency balance.  This balance is the difference between what the home sold for at auction and what is owed to the Creditor on the note that was signed by the Debtor.  This amount can often be significant.

In a bankruptcy proceeding this amount is treated as an unsecured claim, like a credit card. These amounts can be discharged in a Chapter 7 Bankruptcy without repayment presuming the Debtor qualifies for a Chapter 7 case.  This amount can be discharged in a Chapter 13 Bankruptcy as well.  Depending on the Debtor’s situation, income, and expenses, the creditor owed money for the foreclosed home may receive some distribution on their claim in a Chapter 13 Bankruptcy.

There are also tax implications for the foreclosure of a home.  The Creditor is required by law to issue a 1099C (Cancellation of Debt) upon foreclosure of a person’s home.  This creates a situation where significant tax debt can be owed to the IRS.  The IRS treats a 1099C as additional income and taxes are owed on this “income” accordingly.

A Bankruptcy can stop this being treated as income by the IRS.  Once a bankruptcy has been filed a Debtor files form 982 along with the tax return for the year that the 1099C was issued.  This can either be done on a first filing of the tax return or a tax return can be amended and a refund sought or reduction of the tax debt sought.

For a more detailed analysis of your situation please contact our office and one of our attorneys can meet with you and discuss your options relating to a repossessed vehicle and any other credit issues that you may have and help you formulate the game plan that fits your needs best.

My vehicle was repossessed, and I do not want it back, should I file for bankruptcy?

Maybe, depending on the advice of your bankruptcy attorney.

When a vehicle is repossessed and sold in Texas, it must be sold at public auction.  A public auction usually results in a sale that is significantly less than the value of the vehicle if sold through a dealership or private sale.

This means that most Debtors who have a vehicle repossessed will owe what is called a deficiency balance.  This balance is the difference between what the car sold for at auction and what is owed to the Creditor on the note that was signed by the Debtor. This amount can often be significant. In a bankruptcy proceeding this amount is treated as an unsecured claim, like a credit card.

These amounts can be discharged in a Chapter 7 Bankruptcy without repayment, presuming the Debtor qualifies for a Chapter 7 case.  A car repossession deficiency balance, because it can be so high and burdensome to repay, is a common reason for filing Chapter 7 Bankruptcy.

This amount can also be discharged in a Chapter 13 Bankruptcy .  Depending on the Debtor’s situation, income, and expenses, the creditor owed money for the repossessed vehicle may receive some distribution on their claim in a Chapter 13 Bankruptcy.  For a more detailed analysis of your situation, please contact our office and one of our attorneys can meet with you and discuss your options relating to a repossessed vehicle and any other credit issues that you may have. From there we can help you formulate the game plan that best fits your needs.

What happens to my student loans in Bankruptcy?

When a Debtor files for Bankruptcy the Automatic Stay of 11 U.S.C. 362 goes into effect instantaneously without further action of the Court.  The Automatic Stay is an injunction that is automatically entered by the Court upon the commencement of a Bankruptcy Proceeding.  The Automatic Stay disallows any further collection attempts against you that do not go through the Bankruptcy Court first.  This means that all collection actions must stop including the collection of Student Loans through garnishment, lawsuits, voluntary payments, etc.

In a Chapter 13 Bankruptcy the Automatic stay lasts through the duration of your case.  A Chapter 13 Bankruptcy lasts between 3-5 years. During this time, you are not required to pay on your Student Loan, and you are not able to be sued, garnished, levied, etc. as a result of the delinquency on your student loan.  Most student loans are a non-dischargeable debt. While you are not required to pay on the student loans during the pendency of your case they will continue to accrue interest during the course of the case, and you will owe more upon conclusion of the bankruptcy than you did at the beginning due to the accrued interest.  Often a Chapter 13 buys a Debtor the time necessary to plan to repay the student loans while discharging certain unsecured debt to free up capital to be able to repay Student Loans upon completion of the Chapter 13.  Upon completion, you would reach out to the Student Loan creditor and make arrangements to resume regular payments on the debt.

In a Chapter 7 Bankruptcy the breathing room provided is not as profound as it is in a Chapter 13 Bankruptcy.  This is due to the shorter time period that a Chapter 7 Bankruptcy lasts;  typically between 4 and 6 months.  However, just as in a Chapter 13, the Automatic Stay applies, and the Student Loan creditor must discontinue all collection attempts against you for the duration of the case.  Just the same as a Chapter 13, the Student Loan Debt is non-dischargeable in the Chapter 7.

Upon completion of the Chapter 7, a Debtor would reach out to the Student Loan Creditor to resume making regular monthly payments until the Debt is repaid.    When a Bankruptcy is filed the creditor will often “reset the clock” and will not seek to sue or otherwise negatively impact your finances presuming that you resume making the regular direct principal and interest payments that are required by your lender.

Don’t Choose a Bankruptcy Lawyer Until Asking These Vital Questions

Bankruptcies resulting from unpaid medical bills affected an estimated 2 million people in the United States during 2013, but regardless of the cause of your growing debts, choosing the right bankruptcy law firm can help ensure that your case is navigated with efficiency and skill. But choosing the right lawyer won’t happen unless you can ask the right questions. With that in mind, here are just a few essential questions to ask your bankruptcy law firm if you want to find debt relief.

The two main types of consumer bankruptcies are Chapter 7 and Chapter 13 Bankruptcy.  The amount you will be charged and the expected timeline for your case varies greatly between these two types of bankruptcies.

How will you be charged?

As is the case with any type of legal agreement or contract with a lawyer, you’ll want to know far in advance exactly how the attorney will charge you for their services. There are usually several different fees that go into determining your final price.

“Ask the attorney how much you will have to pay, in total. The court charges filing fees…There may be additional costs, such as administrative fees you have to pay the trustee in your Chapter 13 plan. And of course, the attorney will charge you a fee to handle the case. If there are unexpected complications, the attorney may need to spend more time (for which you will have to pay more money); the attorney should let you know what types of situations may lead to a higher fee and whether these are likely in your case,” writes Kathleen Michon on The Bankruptcy Site.

How Will you be Charged for a Chapter 13:

 

  • There is no charge at your first visit with our law firm.  We offer a FREE initial consultation.
  • If you decide you would like to proceed with a Chapter 13 Bankruptcy our firm charges a down payment of $155.00 toward your attorney fees, plus the costs to file the case: A filing Fee Credit Counseling, and Credit Report, for a total down payment of $565.00 for a simple uncontested Chapter 13 Bankruptcy.
  • The Court sets a “no look fee” for attorneys to be paid their fees through the Chapter 13 Plan.  The total “no look fee” is $3,700.00. This is the total attorney fee in 90% of all cases that we handle.  The “no look fee” is repaid through your Chapter 13 Plan, similar to your other creditors.
  • You will find that most Attorneys in our area charge a similar amount in total for a Chapter 13 Bankruptcy because of the Court’s “no look fee.”  The difference you may find among attorneys if you are price shopping is the down payment.

 

  • If your case is more complicated and the time expended on your behalf exceeds the “no look fee” any additional attorney fees must be approved by the Court and arrangements can be made for those additional fees to be paid directly or added to your Chapter 13 Plan.  Again, 90% of all cases that we handle do not incur any additional cost aside from the Court’s no look fee.

In a Chapter 7 case, you will typically pay the full attorney fees, including court costs and other costs, up front before the case is filed.  Outside of attorney costs, you will pay a court filing fee. The bankruptcy code also requires you to complete two credit counseling classes, which run around $50.00 for both.  Additionally, many attorneys will pay a service to pull a comprehensive credit report. The cost for this service will usually be around $50.00 as well.

What is the expected timeline for my particular case?

It’s no secret that each and every bankruptcy case is different. That being said, it’s important to have a solid understanding of the timeline of your case so that you know when you’ll be back on your financial feet. The timeline of your case depends on a few different factors, including your lawyer’s caseload, how complicated your case is, and the lawyer’s level of experience.

In a Chapter 7 bankruptcy, you can expect a typical case to last about four months from filing date to discharge date.  A complicated case with numerous assets, or a case in which an adversary proceeding is filed, could last a year or more, but these types of cases are not common.  The attorneys at Acker Warren will be able to tell you how long your case is expected to last.

Timeline for Chapter 13 Bankruptcy:

  • Initial Consultation – At your initial consultation we will evaluate your options and determine the route which fits the needs of you and your family best.  You will be given a workbook to complete and a list of documents to compile that will be necessary to prepare your bankruptcy paperwork.
  • Workbook Return – You will have an appointment to meet with one of our experienced attorneys to return your workbook and documents and answer any additional questions that have arisen from the completion of your workbook. The down payment for the Chapter 13 will be paid at this appointment. At the conclusion of this appointment we will discuss setting an appointment to sign the final bankruptcy paperwork, this usually occurs within 24-48 hours of your workbook return appointment.
  • Signing – You will have an appointment to meet with one of our experienced attorneys to sign your final bankruptcy documents, those documents that will be filed with the Court.  We will review the documents in their entirety for accuracy. You will be signing these documents under penalty of perjury so this appointment is to ensure that what is being filed is complete, accurate, and truthful.  We will finalize your plan payment amount and ensure that the correct people are set to be repaid under your plan.
  • Filing – your paperwork will be uploaded to the Court and Trustee.  You will be advised as to the date and time of your 341 Meeting. Your first payment to your case Trustee is due 30 days from this date.
  • First Payment – Your first payment is due to the Trustee 30 days from the date your case was filed.  For instance if your case was filed on the 1st day of the month and there are 31 days in that month your payment would be due on the 31st.
  • Financial Management Course – This course is offered at your Trustee’s office free of charge several times each month.  The course is usually offered the morning of your 341 meeting. Please contact your trustee to ensure that you can take the Course the day of your meeting.
  • 341 Meeting – This is your meeting of creditors. These are usually scheduled in our district at either 1:30 or 2:00 pm in the afternoon and occur approximately 45 days after your case is filed on either Tuesday or Wednesday. At this meeting your creditors have the opportunity to appear and ask you questions about your bankruptcy.  Most of the time creditors do not appear at this meeting. If this is the case the trustee will ask you a series of questions to verify the accuracy of your schedules and seek clarification on items on your schedules that the trustee would like clarification or additional information in regards. The meeting usually takes 10-15 minutes.
  • Confirmation – Confirmation is where your plan has been submitted to the Court and the Trustee and your creditors have been given the opportunity to review your plan and file an objections to the plan that may be warranted.  Those objections are most often resolved prior to the confirmation hearing. It is somewhat uncommon to need to appear in front of the Court to seek confirmation of your case. If you are current on your plan payments and have satisfied the other requirements of the Bankruptcy Code to confirm a plan your plan will be recommended for confirmation by the Trustee most of the time without the need for a formal hearing.
  • Confirmation Order – Once confirmation has been recommended by the Trustee the Court will review the case and the Confirmation Order that has been submitted by the Trustee and most of the time will sign the Confirmation Order as is.  If the judge has any issues Confirmation of your case will be reset on the active Court Docket.
  • Trustee’s Recommendation Concerning Claims (TRCC) – This phase of the case is where the claims of your creditors can be litigated.  In order to participate in your plan your creditors must file a Proof of Claim with the Court. The Claim will outline the debt(s) you allegedly owe to the creditor.  There will be detailed attachments to the Proof of Claim that will outline the last transactions on the account. You will receive a detailed listing of the claims against you for you to review.  If you were to have any claims you did not recognize or have a valid objection to we will set an appointment with you to discuss these potential objections. We will review the claims filed in your case as well for objections that are identifiable without your input.  For instance we will object to any claims that are outside of the 4 year statute of limitations period for collections in Texas without any necessary input from you.
  • Debtor’s Certification and Motion for Entry of Discharge– All of the above items typically occur within 6 months of filing your case with the Court.  Your plan will last between 36-60 months depending on your financial circumstances. Presuming no problems arise during the remainder of your case it is common not to hear much from our office and for our office not to hear much from you.  The only real requirements post TRCC to complete your plan are to make all of the required payments under your plan, both those payments due to the trustee and those payments due directly to your creditors under your plan, and to complete the Debtor’s Certification and Motion for Entry of Chapter 13 Discharge upon payment of your FINAL plan payment.

 

Discharge – This is the document you seek by filing the Chapter 13 Bankruptcy.  Presuming that no objections to the Motion are filed, it is fairly uncommon for an objection to be filed, the Discharge Order is entered by the Court approximately 21 days after your Debtor’s Certification and Motion for Entry of Chapter 13 Discharge have been filed with the Court.  At this point if you still have a balance due on your car mortgage or to any other creditors that survive the bankruptcy you will resume direct payments to those creditors if they were previously paid through your plan and your bankruptcy has concluded.

There were a total of 8,980 Chapter 11 bankruptcies filed in the United States during 2013, and people continue to file for bankruptcy every single day. Knowing how to find a lawyer who can handle your financial assets properly is the key to navigating your case efficiently. For more information about hiring the best low cost bankruptcy attorney Fort Worth can provide, contact Acker Warren.

Common Myths About Bankruptcy, Debunked

We get it — the word ‘bankruptcy’ can sound a little scary when you don’t know exactly what it means. But the fact is, declaring bankruptcy can actually give you peace of mind and financial relief under the right circumstances. Let’s debunk some of the most common myths about bankruptcy so that you can think clearly and focus on the facts:

MYTH: Declaring bankruptcy means you lose everything.

This is a common misconception about what declaring bankruptcy truly entails. In most cases, you can keep your material belongings, even your home and your car.

“The vast majority of Chapter 7 cases are no-asset cases, meaning the debtor gives up no possessions. There are two reasons for this. First, you can carve out some basic assets, called exemptions, that are necessary for day-to-day life…And for your possessions that aren’t covered under exemptions? Well, the creditors likely don’t want them,” writes Sean Pyles on Nerdwallet.

Texas specifically has very debtor-friendly exemption laws that allow most debtors to keep all of their assets.  This applies to both Chapter 7 and Chapter 13 cases.

MYTH: It’s better to stay in debt than to declare bankruptcy.

This is another myth people commonly hear about bankruptcy when they’ve reached a level of debt that they’re not sure they can handle. Filing for any type of bankruptcy is certainly a big decision that shouldn’t be taken lightly. That being said, it’s often the best decision for those who would otherwise become unable to ever pay off their debt and need to find debt relief. In any case, the only way to determine the best action to take is to talk to a bankruptcy lawyer.

Surprising to most people, many of our clients at Acker Warren report to us that their credit score improves within a few months of filing bankruptcy.  The theory behind why this occurs is the creditors must remove themselves from your credit report at discharge. Many creditors will remove themselves prior to discharge.  The combination of the removal of negative reporting, and the improvement of your debt-to-income ratio, makes your credit score improve.

MYTH: The sole act of filing for bankruptcy is also expensive and will add to my debt.

Finally, this myth is entirely false. In fact, in Texas, Chapter 13 filing often costs less than $500 to begin a case. There are some complex financial situations that require a higher upfront cost to complete the filing process, but most average cases are manageable to finance. Plus, the debt relief and peace of mind you’ll gain is absolutely priceless.

Further, Chapter 7 bankruptcy can eliminate all of your unsecured debt, except for student loans.  The typical Chapter 7 case is very low cost. From a financial standpoint, filing bankruptcy often saves debtors from being burdened by tens of thousands of dollars in debt, if not more.

Now that you’re aware of some of the real facts about bankruptcy, you can consult a low cost bankruptcy attorney to get the financial advice you need. For more information about bankruptcy lawyers, contact Acker Warren.

Hiring a Bankruptcy Attorney? Here’s What You Should Know

Bankruptcies resulting from unpaid medical bills affected an estimated 2 million people in the United States during 2013, but people continue to file for bankruptcy every day for a wide variety of financial reasons. That being said, if you are considering filing for bankruptcy, hiring a qualified bankruptcy attorney is the most important step you can take to ensure success. Here’s what you should know about working with a low cost bankruptcy attorney.

Types of Bankruptcy

You may know that there are several types of bankruptcy, and the type you and your bankruptcy attorney decide is best will dictate your financial future and how your assets will be managed from that point forward. Chapter 7 is the most common type of bankruptcy.

Chapter 7 Bankruptcy

Our clients find that filing Chapter 7 Bankruptcy is often the cheapest, easiest, and most effective way to resolve their debts.  Attempting to settle unsecured debts or pay them through consolidation programs can be extremely burdensome to your financial and emotional well being.  Fortunately, Chapter 7 bankruptcy can give you a fresh start by eliminating debts quickly and cost efficiently.

Chapter 13 Bankruptcy

Our clients find that filing Chapter 13 Bankruptcy is often the cheapest, easiest, and most effective way to stop a foreclosure or repossession.  Clients are able to repay some debts while often discharging their unsecured debts (i.e. credit card debt, medical bills, payday loans, etc.).  Bringing a delinquent mortgage or vehicle loan current is often not an option our clients can afford.  Fortunately, Chapter 13 Bankruptcy can give you the ability to reorganize your debts, bring mortgage or vehicle loans current, repay non-dischargeable IRS debts, and repay Child Support Arrears.

Cost of Working With a Bankruptcy Law Firm

If you’re truly in a dire financial situation and you’re deep in debt, hiring a bankruptcy lawyer can lead to you finding the debt relief you’ve been seeking. Your lawyer should be very straightforward about their costs; most charge a flat rate that covers all of the hours that are spent on your specific case. There are some lawyers and some types of bankruptcy that don’t work this way financially. The rates charged for Chapter 7 bankruptcies are not regulated by the courts, and they typically range between $1500 and $3,500 depending on the level of complexity of your debt situation.

The retainer required to file a Chapter 13 bankruptcy is typically around $500.00.  This fee typically includes court and other filing costs. The remainder of attorney fees owed are paid through your Chapter 13 Plan Payments over 36 to 60 months.  In the Northern District of Texas, the Court has set a “no look” attorney’s fees of $3,700.00 for a Chapter 13 Bankruptcy. Again, this fee is paid in installments through your plan payments.

How to Find Your Bankruptcy Lawyer

Fortunately, digital resources have made it easier than ever to find an attorney that has the experience needed to handle cases just like yours. Start by taking to the Internet for reviews and ratings, and narrow down your search results before consulting with a few lawyers that have made the cut. When consulting each lawyer, make sure to ask the right questions, including how long they’ve been practicing, how many cases they’ve handled, and which professional organizations they’re a member of.

You’ll also want to make sure that you and your lawyer get along well.  You and your lawyer will be spending several hours together in person and on the phone, so it is important to choose a lawyer that fits your personality.

Ultimately, knowing these details can help you make the most informed decision based on your specific financial situation and legal needs. For more information about bankruptcy attorneys, contact Acker Warren.

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