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What is Bankruptcy?
Bankruptcy is often a tool of last resort for individuals or business that are struggling to meet their financial obligations. Bankruptcy provisions potentially allow debtors to restructure their debt agreements, reduce the amount they are owed, or in some cases eliminate part or all their debt altogether.
However, while bankruptcy can represent a fresh financial start to someone struggling to meet their debt obligations, it is important to note that the bankruptcy process itself has a number of expenses that cannot be discharged.
Understanding Consumer Bankruptcy
Consumer bankruptcy is divided into two types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy lawyers work on liquidation bankruptcies (also known as "straight" bankruptcies, where most of your debts are discharged or liquidated under bankruptcy law.
Chapter 13 bankruptcy lawyers instead work on reorganization bankruptcies, where the individual filing for bankruptcy sets up a repayment plan to resolve his or her debt. You can learn more about bankruptcy advantages and disadvantages by speaking to bankruptcy lawyers.
Reorganization bankruptcy (or Chapter 11) involves filing a plan with the bankruptcy court suggesting how you will repay your debt. Some debts must be repaid in full while others require only a percentage or nothing at all. Chapter 11 Bankruptcy is available to individuals, corporations, and partnerships. It has no limits on the amount of debt, again, like Chapter 13.
Chapter 11 is the typical bankruptcy choice for large businesses seeking to restructure their debt and become profitable again. Chapter 11 is the most flexible of all the bankruptcy chapters, which makes it generally more expensive to the debtor. The rate of successful reorganizations is very low.
Consumer credit comes in several forms: credit cards, charge cards, and debit cards. It is frequently dependent on a good, pre-existing credit score and a positive history of paying off credit card debt. You can find out what your credit score is by requesting credit reports from one of the three major credit agencies: Equifax, Experian, and TransUnion. You can begin paying off debt by choosing a credit counselor in your area.
Collection is a process that creditors can use to get money from uncooperative debtors. Collectors must abide by the FDCPA (Fair Act), and cannot threaten, swear at, mislead, or lie to the debtors from which they are trying to collect payment. Debt collection laws also prohibit calling before 8 AM or after 9 PM. If you're being harassed by debt collectors, consider contacting local bankruptcy attorneys for assistance using the LegalMatch matching service.
Income tax is a familiar legal phenomenon for most people who bring home a paycheck. Audits and appeals lawyers can assist you if you have been audited by the IRS and are planning to file an appeal with the tax court. In the case of tax evasion, bankruptcy attorneys or bankruptcy lawyers alike can provide insight and review potential defenses to tax evasion. Failure to file tax returns or pay tax penalties can be a serious legal problem and should be brought up as soon as possible with tax or bankruptcy lawyers (often misspelled as bankruptcy lawyers).
How Much Does Filing for Bankruptcy Cost?
Bankruptcy can get expensive depending on the type of bankruptcy you choose. First, a person who is filing bankruptcy has to pay a filing fee which for a Chapter 7 is around $335 and for a Chapter 13 is $310. There is also a charge for a bankruptcy trustee which ranges around $15 to $20. You may request to pay the filing fees in installments; most courts will allow it if you can show it would be a financial hardship to pay all at once.
If you file under Chapter 7 and later a Chapter 13, you would not have to pay any extra fee. However, if you file under Chapter 13 and to Chapter 7, you'll have to pay a conversion fee of $25.
In addition to the filing fees, you'll be required to obtain credit counseling and take a personal financial management course. These counseling classes cost anywhere from $20 to $100, depending on where you file. Also, many hire a bankruptcy lawyer to help them through the process and depending on the lawyer's experience and the location of the service, these fees can vary.
Do I Need a Bankruptcy Lawyer?
Whether bankruptcy is the right solution to your financial problems will depend on your situation, the type of debts you have, and how much property you need to protect. If you are contemplating bankruptcy, you should consider discussing your options with an experienced bankruptcy attorney.
A bankruptcy attorney can help you decide whether or not to file for bankruptcy. If you decide to file, an attorney can help ensure that your property is protected, all of your dischargeable debts are discharged, and your creditors do not violate your rights, so that when you complete your bankruptcy, you will be on the right road to financial recovery.