From Bankruptcy Filing to Financial Recovery
Bankruptcy is a legal process where an individual or an organization that is unable to pay their debts seeks relief from their creditors. The process can be complicated and overwhelming, which is why many individuals and organizations seek the services of a bankruptcy lawyer. In this article, we will explore the various ways in which a bankruptcy lawyer can help individuals and organizations navigate the bankruptcy process and achieve financial recovery.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is a liquidation bankruptcy, where a debtor’s non-exempt assets are sold to pay off their debts. A bankruptcy lawyer can help individuals and organizations determine if they qualify for Chapter 7 bankruptcy and guide them through the process.
Means Test
The means test is a calculation that determines if an individual or organization qualifies for Chapter 7 bankruptcy. The test compares the individual’s or organization’s income to the median income of the state in which they reside. If their income is below the median, they qualify for Chapter 7 bankruptcy. If their income is above the median, the means test calculates their disposable income to determine if they have the ability to repay their debts. A bankruptcy lawyer can help individuals and organizations navigate the means test and determine if they qualify for Chapter 7 bankruptcy.
Exemptions
Exemptions are assets that are protected from being sold in Chapter 7 bankruptcy. Each state has its own set of exemptions, and a bankruptcy lawyer can help individuals and organizations determine which exemptions apply to them.
Automatic Stay
The automatic stay is a provision in bankruptcy law that prohibits creditors from taking any action to collect on a debt once a bankruptcy case is filed. The automatic stay is effective immediately upon filing, and a bankruptcy lawyer can help individuals and organizations understand its implications and enforce its provisions.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a reorganization bankruptcy, where a debtor’s debts are restructured into a payment plan. A bankruptcy lawyer can help individuals and organizations determine if they qualify for Chapter 13 bankruptcy and guide them through the process.
Debt Limits
To qualify for Chapter 13 bankruptcy, an individual’s unsecured debts must be less than $419,275 and secured debts must be less than $1,257,850. These limits are adjusted periodically for inflation. A bankruptcy lawyer can help individuals and organizations determine if they meet the debt limits for Chapter 13 bankruptcy.
Payment Plan
The payment plan in Chapter 13 bankruptcy is a reorganization of the debtor’s debts into a single monthly payment that is made to a trustee, who then distributes the funds to the creditors. The payment plan lasts between three and five years, and a bankruptcy lawyer can help individuals and organizations create a feasible plan that meets their financial needs.
Creditor Negotiations
A bankruptcy lawyer can negotiate with creditors on behalf of the debtor to reduce the amount of debt owed or to extend the payment period. This can result in a more manageable payment plan that allows the debtor to achieve financial recovery.
Credit Counseling
Before filing for bankruptcy, individuals and organizations are required to undergo credit counseling. A bankruptcy lawyer can help individuals and organizations find a reputable credit counseling agency and guide them through the process.
Post-Bankruptcy Counseling
After filing for bankruptcy, individuals and organizations are required to undergo post-bankruptcy counseling. A bankruptcy lawyer can help individuals and organizations find a reputable post-bankruptcy counseling agency and guide them through the process.
Benefits of Hiring a Bankruptcy Lawyer
Hiring a bankruptcy lawyer can provide many benefits for individuals and organizations seeking relief from their debts. Some of these benefits include:
Expertise – A bankruptcy lawyer has the expertise and experience to guide individuals and organizations through the complicated and overwhelming bankruptcy process.
Protection – A bankruptcy lawyer can protect individuals and organizations from aggressive creditors and ensure that their rights are upheld throughout the bankruptcy process.
Negotiatons – A bankruptcy lawyer can negotiate with creditors on behalf of the debtor to reduce the amount of debt owed or to extend the payment period, resulting in a more manageable payment plan.
Representation – A bankruptcy lawyer can represent individuals and organizations in court and ensure that their case is presented in the best possible light.
Guidance – A bankruptcy lawyer can provide guidance and support throughout the bankruptcy process, ensuring that individuals and organizations make informed decisions that will lead to financial recovery.
Table: Median Income by State for Bankruptcy Means Test
| State | One Person | Two People | Three People | Four People |
|---|---|---|---|---|
| Alabama | $46,014 | $57,551 | $64,657 | $75,362 |
| Alaska | $65,313 | $84,680 | $95,273 | $102,569 |
| Arizona | $53,087 | $68,103 | $73,885 | $85,270 |
| Arkansas | $43,155 | $55,604 | $61,633 | $71,432 |
| California | $61,044 | $79,890 | $89,108 | $102,372 |
| Colorado | $61,065 | $81,096 | $89,965 | $103,972 |
| Connecticut | $71,423 | $89,382 | $103,176 | $123,334 |
| Delaware | $59,484 | $76,183 | $87,463 | $104,032 |
| District of Columbia | $73,335 | $104,509 | $111,991 | $111,991 |
| Florida | $49,977 | $62,065 | $68,408 | $79,221 |
| Georgia | $50,112 | $65,139 | $72,930 | $84,836 |
| Hawaii | $70,605 | $85,968 | $96,583 | $113,785 |
| Idaho | $52,379 | $66,853 | $70,270 | $81,463 |
| Illinois | $60,332 | $74,989 | $87,204 | $106,646 |
| Indiana | $50,336 | $65,303 | $76,055 | $92,076 |
| Iowa | $55,402 | $72,161 | $84,070 | $101,197 |
| Kansas | $52,349 | $68,204 | $79,625 | $95,186 |
| Kentucky | $46,352 | $59,002 | $69,088 | $81,591 |
| Louisiana | $46,594 | $57,596 | $65,542 | $74,155 |
| Maine | $52,321 | $64,390 | $74,838 | $89,223 |
| Maryland | $73,107 | $92,626 | $107,302 | $127,528 |
| Massachusetts | $70,648 | $89,186 | $103,659 | $126,361 |
| Michigan | $55,046 | $67,294 | $83,015 | $100,311 |
Source: United States Census Bureau, Median Household Income by State: 2019.
FAQs About Bankruptcy Lawyers
What is a bankruptcy lawyer?
A bankruptcy lawyer is a legal professional who specializes in helping individuals and organizations navigate the bankruptcy process. They can provide advice and guidance on the best course of action for a particular situation, help individuals and organizations file for bankruptcy, and represent them in court proceedings.
When should I consider hiring a bankruptcy lawyer?
You should consider hiring a bankruptcy lawyer if you are struggling with overwhelming debt and are considering filing for bankruptcy. A bankruptcy lawyer can help you determine if bankruptcy is the best option for your situation and can guide you through the process to ensure that your rights are protected and you receive the best possible outcome.
How do I choose the right bankruptcy lawyer?
Choosing the right bankruptcy lawyer can be a crucial decision in your financial recovery. Here are some factors to consider when choosing a bankruptcy lawyer:
Experience:Â Look for a bankruptcy lawyer with experience in handling cases similar to yours.
Reputation:Â Check online reviews and ask for referrals from friends or family members who have used a bankruptcy lawyer in the past.
Communication:Â Make sure the bankruptcy lawyer communicates with you clearly and regularly and is available to answer any questions you may have.
Cost:Â Understand the cost structure upfront and ensure that you are comfortable with the fees.
Can I file for bankruptcy without a lawyer?
Technically, yes, you can file for bankruptcy without a lawyer, but it is not recommended. The bankruptcy process can be complicated, and mistakes can be costly. A bankruptcy lawyer can guide you through the process and help ensure that your rights are protected.
How much does it cost to hire a bankruptcy lawyer?
The cost of hiring a bankruptcy lawyer varies depending on several factors, such as the complexity of the case and the location of the lawyer. Some bankruptcy lawyers charge a flat fee for their services, while others charge by the hour. The average cost of hiring a bankruptcy lawyer ranges from $1,200 to $2,500.
Conclusion
Bankruptcy can be a challenging and overwhelming process, but with the help of a bankruptcy lawyer, individuals and organizations can navigate the process and achieve financial recovery. From determining eligibility for Chapter 7 or Chapter 13 bankruptcy, to negotiating with creditors and creating a feasible payment plan, a bankruptcy lawyer can provide the expertise, protection, and guidance necessary to achieve financial recovery. If you are struggling with overwhelming debt, consider seeking the services of a bankruptcy lawyer to help you achieve financial freedom.
