Bankruptcy Law Firms

When a person needs to consult bankruptcy law firms, he has legal options to keep in mind that will help him figure out if this option is the right one at this time. This area of the legal system is one of the most complex in our country, and sometimes people don't understand the ramifications of filing for this protection and which of the laws would be most appropriate for the situation. Both individuals and companies can file for debt protection, but the laws have changed recently. No one's situation is hopeless. There are remedies that can be gained by consulting a bankruptcy law office and asking the right questions. People get into debt for various reasons, and most people do not intend to run up their bills to the point that they can't manage them. Many people find themselves in the position of working hard to pay off these bills, but get further and further behind. The reasons for the debts are also varied, such as unexpected medical expenses, the loss of a job, a divorce, or even a natural disaster.

Bankruptcy law firms are specialists in looking at an individual's or a company's finances and guiding him through the legal morass. They will advise their clients on which of the many options will best fit the situation. The two most common remedies for an individual are Chapter 7 and Chapter 13 bankruptcies. Chapter 7 requires a means test, which means that the applicant must qualify by having an income that is either lower or equal to the median income in his state. For example, if the median income in his state is $50,000 per year, then he cannot make more than that amount to be able to file for this protection. The bankruptcy law office will have the information needed about the median income. If the filer's income is greater than the median income, then the attorney will make other calculations to see if the person still qualifies. If the person qualifies, then the attorney will devise a plan to settle the debts. One advantage is that as soon as the person begins the process, all creditors must back off and become part of the process. In other words, the harassing phone calls and letters will end.

A person can qualify for Chapter 13 much easier, but this entails making a full or partial repayment through the court. The debtor makes up a plan, which must be approved by the court. Once the court approves the plan, then the debtor begins a payment schedule. The court approves a trustee that oversees this payment. The trustee makes the payments to the creditors, and this may involve three to five years of payments. When all payments have been made by the debtor as required by the court, the debt is discharged. Unlike Chapter 7, Chapter 13 does not have a means requirement; however, the debtor must have a regular income from which he can pay his debts and with which he can make a budget.

Bankruptcy law firms are expert in helping a person decide which of the two bankruptcies would be most advantageous. A simple answer would be that a person who has lots of unsecured debt like credit cards and medical bills would be better off filing under Chapter 7. For this option, a lot of the unsecured debt may be discharged leaving the debtor with few creditors to repay, and the court process flows much more quickly. Also, creditors cannot contact the person under this protection. Chapter 13 is better for the person who has a regular income and some property that would fall under the court and needs to be protected, especially equity in a home. However, this option requires most of the debt to be repaid, just over an extended period of time. Because the repayment goes through a trustee, once again, the creditors will have no contact with the debtor. But because of the additional legal process, the time in court also takes longer. If a person has a foreclosure pending or a repossession, choosing Chapter 13 with its automatic stay can help the debtor catch up on past due payments. The bankruptcy law office will review the specific financial needs of the client and advise him on which way would be best to take.

In 2005, the U.S. Bankruptcy Code required a complete U.S. Trustee approved Credit Counseling Briefing. Petitions filed without this certificate may be dismissed, so it is important to hire a bankruptcy law office to help write up the correct document in the right format. If the petition is dismissed, creditors can take collection action, move on foreclosure or repossession until the automatic stay is in effect. This can result in catastrophe for the person who struggles to keep up with payments and keeps getting further behind. Another requirement for fulfilling the law is to complete a U.S. Trustee approved financial management course, which is often called Debtor Education. This must be completed before the debts can be discharged. Bankruptcy law firms will have the information on where this course can be obtained.

Many hard working people find themselves in financial distress and need the help of bankruptcy law firms. But asking for help does not absolve anyone of the responsibility of being a wise steward. The Bible says, "For wisdom is a defence, and money is a defence: but the excellency of knowledge is, that wisdom giveth life to them that have it" (Ecclesiastes 7:12).

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