There are various reasons why people get into financial debts. Mortgage payments, hospital bills, overspending, emergency expenditure, job loss, credit card bills, bad investment, identity thefts, and other issues are mainly responsible for overwhelming debts of a person. When he/she is in deep debts and unable to pay what they owe to creditors, he spends a lot of time worrying about his debts, and his life becomes most stressful and miserable. He is also exposed to constant and threatening calls from creditors and debt collection agencies that further jeopardize his life.
However, Bankruptcy Code provides a debt relief solution in the form of filing bankruptcy to debtors or organizations who are in deep debts and not able to pay to creditors. The debtors can file bankruptcy to get relief from their debts. Bankruptcy law offers Chapter 7 or Chapter 13 bankruptcy options to debtors for their debt relief. The Supreme Court has also termed Bankruptcy an opportunity to debtors for a financial “fresh start.”
Under Chapter 7 bankruptcy, this law allows a debtor to retain exempt properties for a fresh start. The properties that are not exempted are then sold by the court-appointed bankruptcy trustee and sale proceed is distributed among the creditors. However, not all debtors are allowed to file it under this Chapter. The law has an eligibility factor in determining the eligibility of debtors to to file Chapter 7. The law has designed a “Mean Test” to evaluate debtor's eligibility to file under this chapter. Mean Test is based on measures of income, a number of persons in the family, and allowable expenses. Under the Mean Test formula, the income of the debtor must be below the State Median income, but if the net monthly income is more than the State Median income, the debtor is not eligible for Chapter 7. He can only file Chapter 13 bankruptcy.
The debtors, who are not allowed to file Chapter 7 bankruptcy, can file Chapter 13 bankruptcy. Under this chapter, the debtors are required to submit a repayment plan for paying creditors. The repayment extends for 3-5 years. The court allows the debtor to keep a valuable property, mostly a house for his financial fresh start. However, debtors must have a regular income to be able to pay the creditors. The court approves the plan after considering the regular predictable income of the debtor and his repayment plan.
When a person plans to file Bankruptcy, he/she has two available options, either file on his own, without a lawyer, or file through a lawyer. Filing it without a lawyer is known as a “pro se” debtor under the Bankruptcy Code. The only advantage of filing on your own is you can save some money because there will not be any attorney to charge you his fees. However, filing bankruptcy through an experienced lawyer is highly recommended to debtors for a satisfactory outcome of his court proceedings and bankruptcy case.
We interviewed leading Bankruptcy lawyer, James Smith, and sought his opinion on the importance of seeking legal advice from an experienced attorney. He identified few reasons for hiring an experienced bankruptcy lawyer by a debtor.
- Bankruptcy is a complex and complicated process, and only an experienced lawyer understands the pros and con of the bankruptcy process.
- The experienced lawyer is well-versed with State, Federal, and Local bankruptcy laws. He also understands local court proceedings and changes in the bankruptcy law.
- The lawyer guides you through the entire filing processes and court proceedings.
- Helps you reorganize your debts for a fresh financial start
- You may be confused under which chapter to file, but a lawyer will assess your financial and debt status and advise you whether to file under Chapter 7 or Chapter 13 bankruptcy. He will also tell you if filing bankruptcy petition is in your best interest or not after getting necessary information from you.
- The court rejects or delays your Application or filling if there are any errors. You can avoid these risks if you hire an attorney.
- You will be protected from constant calls and creditors' harassment
- Bankruptcy filing process includes a collection of documents and a large amount of paperwork. The court may also demand supporting documents. A lawyer can gather necessary documents for your bankruptcy process.
- Bankruptcy lawyer will keep you update with the court proceedings and case status every step of the way.
James Smith also says that for the best outcome of your bankruptcy case and debt relief, a debtor must not hide anything from his lawyer. He should tell correct information about his properties, assets, debts, and financial status. He further informs that hiring experienced bankruptcy lawyer is beneficial to a debtor in the long run because any mistakes can cost you your case.
Franks Ross is well-known bankruptcy lawyers in wichita ks. He is known for his specialization and experience in practicing bankruptcy law. He helps people and small businesses find a solution out of debt and stand on their feet again. He is well -versed with Chapter 7 & Chapter 13 bankruptcy proceedings.