Bankruptcy: What You Need to Know

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Bankruptcy: What You Need to Know

Posted June 11th, 2011 by Jessica Goodenough No Comments »

Filing personal bankruptcy is becoming more common, especially in this tough economy. Some of the stigma associated with bankruptcy has disappeared over time. People use it to wipe out debts, stave off foreclosure or just start over. Still, while it’s nothing to be ashamed of if you feel it’s your best option, you need to be aware of the ramifications of filing. It affects your credit report for 7-10 years and can negatively impact interest rates on credit cards and loans and even insurance premiums. Bankruptcy can negatively influence prospective employers. It also usually won’t eliminate child support, most student loans or taxes owed.

Bankruptcy is a Serious Undertaking

Something this important to your financial future should not be taken lightly, and one of the biggest players in this undertaking will be your bankruptcy attorney. According to the US Trustee Program, which supervises bankruptcy cases, bankruptcy mills are a growing problem. All bankruptcy attorneys are not created equal. Bankruptcy is a high volume business, and many attorneys are overloaded and don’t put adequate time and effort into their cases. And storefront bankruptcy petition preparers may offer cut-rate prices for substandard services. Some of these mills give bad advice, use bait-and-switch tactics, miss key meetings or recommend filings that aren’t appropriate in order to charge higher fees.

You Get What You Pay For

You don’t want to skimp when it comes to your attorney. How do you find a good one? First, you need to start your search as soon as possible. You want to have enough time to research your choices and give the attorney time to adequately prepare your case. Seek referrals from legal professionals, not friends or the phone book. Your personal lawyer or the state bar association may be able to help.

Don’t just go for the cheapest attorney. Yes, you are filing bankruptcy so you don’t have a lot of money. But if you hire an attorney who is less than qualified, the mistakes made could cost you more in the long run. Make sure you know ahead of time what the fees will be. Also, check the going rate and make sure fees are appropriate.

Ask Questions and Investigate

Once you get some referrals, check out their qualifications and any special certifications. Bankruptcy is a specialty area; make sure your choice is qualified to handle it. You can also spend a day in bankruptcy court to watch the attorneys at work and get an idea of the process, as well as interview debtors to see if they are satisfied with the attorney’s representation.

Check out the firm’s offices and ask questions of the attorney who will handle your case. Find out how many personal bankruptcies they handle each year, how much access you will have to the attorney, what the time frame is for the proceeding and how the process will work. Often you may be assigned a paralegal or clerk who handles much of the work, and the attorney just goes to represent you on the court date. Also, find out what they expect of you during the process.

Assert Yourself

However, one of the most important things you can do is to be proactive. Be your own advocate. Don’t depend on the attorney to take care of you. Gather the documents you will need – pay stubs, deeds, list of creditors, tax returns, etc. Your case is only as good as the information you provide to the attorney. Be honest with the attorney and cooperate as fully as possible. Educate yourself on the process; then stay informed and involved. Follow up with the attorney on matters that concern you. Don’t always just assume they are being handled satisfactorily. Lawyers make mistakes too.

Filing for bankruptcy can be a stressful proposition, but if you do your homework, stay informed and choose a good attorney, you should be able to get yourself back on track and move forward sooner than you think.

Cheryl Johnson is a part-time writer who loves to help others save money. If you are interested in having Cheryl write for you, find her at Textbroker.com under Cheryl24.

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