Hiring a Chapter 13 bankruptcy attorney used to be a relatively simple process. Today, it can be challenging to locate an attorney to represent your case; particularly, if you reside in a small town. Additionally, the cost of filing bankruptcy has substantially increased due to the Bankruptcy Abuse Prevention and Consumer Protection Act.
BAPCPA includes a provision which requires every chapter 13 bankruptcy attorney to submit a notarized statement verifying their client's petition is necessary. This places an additional layer or risk upon the lawyer if clients are not honest when providing financial details.
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The new bankruptcy laws require attorneys to engage in additional research to ensure clients have provided truthful and adequate information. The additional casework and higher risk factors are the primary factor in increased legal fees which in turn makes it more difficult for U.S. citizens to obtain appropriate counsel.
While businesses and corporations are legally required to have legal representation, individuals have the option to file bankruptcy on their own. Few people possess the knowledge or skills to undergo the process alone. It is important to understand that bankruptcy has far-reaching financial and legal consequences and obtaining appropriate counsel is strongly recommended.
Multiple steps are involved with the bankruptcy process. Debtors must submit a petition to the court, notify creditors, attend a 341 creditor meeting, obtain credit counseling through an approved U.S. Trustee agency; and file financial and legal documents in a timely fashion.
Financial experts recommend consulting with a minimum of three bankruptcy attorneys before making a final decision. It is important to work with a lawyer who has a thorough understanding of BAPCPA requirements. One improper form or missed deadline can result in termination of the bankruptcy petition.
Individuals whose income is at or below poverty level might be able to obtain legal counsel at no cost through pro bono services. The American Bar Association provides a list of pro bono Chapter 13 bankruptcy attorneys via their website at abanet.org.
Take time to organize financial records prior to meeting with prospective lawyers. Make a list of questions and write down the answers during the consultation. When contacting law firms to schedule meetings, ask what information the attorney requires. Most lawyers request detailed list of income and expenses, payroll records, current and previous year tax returns, and creditor contact information.
Chapter 13 bankruptcy requires debtors to obtain credit counseling through an approved U.S. Trustee agency. Debtors are required to submit a repayment plan through the court and make monthly payments to the bankruptcy Trustee.
Chapter 13 payments typically extend for three to five years. During this phase, debtors are prohibited from acquiring new debts without court authorization. If debtors miss a scheduled payment, creditors can petition the court seeking dismissal.
An unfortunate truth is approximately 75-percent of people fail out of bankruptcy within the first year. When this occurs, debtors lose court protection and creditors can move forward with collection actions.
While bankruptcy can provide financial relief, it can also cause further hardship. It is important to consider alternatives such as debt consolidation, debt settlement, credit counseling and budgeting which can have less impact on credit ratings while providing the same results.
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