It may not always be necessary to use the help of a lawyer, but when dealing with the complexities of bankruptcy, it can help to have a professional on your side.
When an organization or an individual is unable to pay off their debts and initiates a court order to reorganize the debts and help them make the payment in a planned manner, it is called the state of being in bankruptcy.
Bankruptcy can be a complicated process and laws can differ in each state. Moreover, debtors or the entity that owes money to the creditors, can also have different types of debt, secured and unsecured. A secured debt is one that has a property associated to it, for example a home loan. If the debtor fails to make the payments on time, the creditor can have the home repossessed. This option is not available in an unsecured debt.
However, if you are an individual, bankruptcy lawyers can help guide you on how to handle your bankruptcy better. To begin with, you need to determine what kind of bankruptcy you can file.
Types of Bankruptcy
There are four kinds of bankruptcy:
Chapter 7: This is also called as the liquidation bankruptcy or where the trustee needs to sell off non-exempt assets held by the debtor to pay off the debts to the maximum extent possible. The remaining debt is discharged. This is one of the most common kinds of bankruptcies with individuals and corporations eligible to file under it. However, for a business, filing under Chapter 7 means limitations on their continuation of business operations.
Chapter 11: Chapter 11 is used by businesses as well as individuals at times. A debtor can continue to function as before in this type of bankruptcy. Ownership of assets is maintained, unlike in the Chapter 7 bankruptcy. In this type of bankruptcy, a reorganization plan is utilized to pay creditors.
Chapter 12: This bankruptcy is for farm owners. The debtors own their assets and work out a repayment plan to pay off creditors. However, even if you own a farm, whether or not you can go for this type of filing is something a bankruptcy lawyer can help you determine.
Chapter 13: In Chapter 13 bankruptcy, a debtor gets to retain assets while working out a repayment plan for three to five years. This kind of bankruptcy can be narrow because only some kind of debts may be discharged here. However, the amount of debt discharged depends on the income of the debtor.
Compare chapter 7 and chapter 13
According to the US Bankruptcy Courts statistics, during the one-month period ending on April 30, 2016, bankruptcy statistics were as follows:
Total Chapter 7: 46,948
Total Chapter 11: 848
Total Chapter 12: 48
Total Chapter 13: 24,575
In the state of Massachusetts, the number of total bankruptcy filings was 726.
Not everyone needs a lawyer to file for bankruptcy. There is a term ‘pro se’ which means representing oneself to file for your case. However, given some of the complications involved in bankruptcy, it is a good idea to have a lawyer on your side.
If your case is a simple one, for example where you don’t own assets and you have no fraud allegations, then you probably can file yourself. Your household income, if it is less than the state median, makes you eligible for Chapter 7.
When do you need a lawyer?
Most Chapter 13 bankruptcies or other difficult ones not represented by lawyers get dismissed by the courts for not meeting the eligibility requirements or for poorly filled forms.
You may need a lawyer even with a simple bankruptcy, due to the amount of paperwork involved. You will also need to research bankruptcy laws and exemptions to be able to better follow rules and regulations. Gather your financial documents so that you do not fall short on any of the parameters.
You need a lawyer when you are filing a complicated case in either of the bankruptcies. These complications can be in the form of creating a repayment plan in a Chapter 13 bankruptcy, for example, which needs expensive software, or filing additional motions for clearing your second mortgage or car loan.
Some bankruptcies allow you to file again after the period of 120 or 180 days. A bankruptcy lawyer can help you arrive at these decisions better without risking your case getting dismissed.
About Us
Legal Rights Advocates, PLLC is a law firm that specializes in helping clients who are facing the prospect of bankruptcy and are unclear about how to go ahead. Our team of bankruptcy attorneys , over the years, has helped countless clients win their bankruptcy cases without undergoing the trauma and worries typically associated with it. We also assist clients with information on how to conduct themselves during bankruptcy filings.
If you are interested in learning more about filing for bankruptcy in Massachusetts, call us at (855) 254-7841 for immediate assistance.
(855) 254-7841
(855) 254-7841
