Businesses must have an attorney to file for bankruptcy. Individuals may file for bankruptcy themselves, but it may come back to hurt them. Even the federal courts strongly recommend using a competent attorney when filing for bankruptcy due to its long-term consequences.
Bankruptcy law is a complex field. Without the legal training and experience to understand the law’s subtleties, a person may not file for bankruptcy correctly. He or she might miss exemptions that protect property from sale, or an individual might fail to properly include certain debt, which the court would not include in the bankruptcy discharge. A person considering filing for bankruptcy may wish to consult with a Kansas City bankruptcy attorney to learn how they can work together to pursue bankruptcy in the most effective manner.
Using an Attorney to Select the Best Bankruptcy for You
There is no one-size-fits-all solution for individuals considering filing for bankruptcy. Depending on the person’s situation, a Chapter 7 bankruptcy may be preferable to a Chapter 13 one. Or, the person may not need to file for bankruptcy at all just yet, as an attorney may be able to help the person and his or her creditors come to a loan workout that makes repayment terms more manageable.
Some of the factors that an experienced bankruptcy attorney will discuss with you in regard to each option include:
- Chapter 7 Bankruptcy – In general, a Chapter 7 bankruptcy will discharge most unsecured debt for consumers, but if not handled properly, it can have devastating consequences. If not properly protected in the pleadings, the bankruptcy trustee may attempt to sell non-exempt assets that a debtor has to pay off creditors. Chapter 7 bankruptcies may work best for people with a large amount of unsecured debt who do not have a steady stream of income.
- Chapter 13 Bankruptcy – This bankruptcy is often better for people who are having trouble keeping up on their payments, but have a steady income and just need to have their payments set at a more manageable level. Chapter 13 filers generally keep all of their property, but the bankruptcy court will set a strict repayment schedule and budget for the filer for the next three to five years. A failure to meet the repayment schedule may result in the bankruptcy becoming a Chapter 7 one.
- Loan workouts – In some instances, people may have trouble repaying a particular debt like a home mortgage, for instance. While a bankruptcy may not yet be necessary, the debtor and an experienced attorney may be able to achieve a compromise with the bank to renegotiate repayment terms and set a new repayment schedule that is more manageable. Loan workouts may be ideal for people who face sudden hardships, but who have a steady income and have had no financial difficulties in the past.
Using an Attorney to Identify Bankruptcy Exemptions
For many people, bankruptcy exemptions are the most important item about which they need to be aware. Exemptions protect property. Under a Chapter 7 bankruptcy, for example, the bankruptcy trustee may take non-exempt property and sell it to use the proceeds to pay off creditors. The trustee cannot sell exempt property, however.
Proper use of bankruptcy exemptions is an important benefit of using an experienced bankruptcy attorney. These exemptions can protect your home, household goods, jewelry, motor vehicle, business-related items and other property depending on the size of the family and the number of dependants.
Residency requirements, exceptions and other detailed, legal requirements govern the ability of a bankruptcy filer to use exemptions available in Missouri and Kansas. A bankruptcy attorney can review your financial situation along with you to determine how to best employ exemptions to your benefit.
Contact a Kansas City bankruptcy lawyer at The Sader Law Firm if you are considering filing for bankruptcy to ensure that you protect your property and regain your financial footing as effectively as possible.