Declaring bankruptcy is on the rise due to the current financial situation, but it is no longer as simple as it used to be. Whereas at one time there was only one type of bankruptcy to consider, and judges were very generous in denying debt under the rules, there are now two different ways to declare bankruptcy under US Federal law.
Since each type of bankruptcy is very different from one another, a competent and experienced bankruptcy attorney is required so that debtors can file properly and have a chance to start over. There are also tax issues to consider as a result of a bankruptcy declaration. Bankruptcy attorneys provide their own clients with the necessary tax counseling or they can arrange for assistance from experienced colleagues in tax law and accounting for competent professional tax advice related to bankruptcy filings.
Chapter 7 bankruptcy, in which all debts are waived, is now only available to applicants who can prove that they do not have sufficient income to pay back their unsecured debt. This may be difficult to prove without the help of a trained bankruptcy attorney, who will represent the applicant in court and provide clear evidence when he or she can prove that Chapter 7 is indeed the correct choice.
In the event that Chapter 13 bankruptcy, which calls for an arrangement to repay part of the debt, is the appropriate recourse for the applicant, a competent bankruptcy attorney will ensure that the judge approves a plan that allows the applicant the opportunity to rebuild and to have the necessary means for a decent living. and healthy while making the payments necessary to reduce and pay off his debts.
Attempting to file without a bankruptcy attorney may lead to a judge ruling that Chapter 7 bankruptcy is not permitted in cases where an attorney can legally and ethically file a compelling case for this type of bankruptcy relief. It can also lead to stifling Chapter 13 deals where debtors are left without sufficient funds to even meet their basic needs. Such an agreement can force the debtor to default under his agreement and face serious consequences simply because he is unable to support himself and his family under the agreement he received due to his ignorance of the law and lack of legal counsel.
Bankruptcy is a serious and complex issue, and a trained, experienced, and reputable bankruptcy attorney will ensure the debtor is able to start from scratch.
