If you're thinking about bankruptcy, you're probably trying to reduce your expenses as much as possible. So how can it make sense to hire a bankruptcy attorney when you already have other bills you can't pay? The truth is that there are several ways a bankruptcy can go horribly wrong, and your bankruptcy attorney can help you prevent that.
Choosing the Wrong Type of Bankruptcy
Not all bankruptcies are equal. There are actually two types of bankruptcy. One is a Chapter 7 bankruptcy where you sell all your stuff, give the money to your creditors, and any remaining debts get canceled. The other is a Chapter 13 bankruptcy where you go into a new payment plan that often means that you will end up paying less than the amount you originally owed. Most people want to avoid the disruption of Chapter 7 if they can. However, if you can't complete your Chapter 13 payment plan, you could be in an even worse position when you started. That's why it's important to get this choice right.
Submitting Incorrect Financial Information
When you file for bankruptcy, you have to submit detailed financial information so that the court can assess your eligibility and your creditors have a chance to dispute anything they feel is incorrect. You may know the importance of telling the truth and trying to get things right, but the reality is that these forms can be so complicated that it's easy to make a mistake. If no one catches your mistake, or a creditor doesn't point it out because it's to their advantage, you could end up paying thousands of dollars more than you should have.
Missing Bankruptcy Exemptions
Certain assets and income sources are exempt from bankruptcy proceedings. What that means is that there are certain things you wouldn't have to sell to pay off your creditors in Chapter 7 or certain income that wouldn't get calculated for your payments in Chapter 13. These rules can be complicated especially when there's a limit on the value of an exemption that may be lower than the value of what you own. For example, you might get a $5,000 exemption for your car when it's worth $10,000. To make sure that you get every dollar of the exemptions you're entitled to and don't sell anything you don't need to, it's important to work with a bankruptcy attorney who thoroughly understands how these exemptions work.
To learn more about how to navigate the bankruptcy process, contact a local bankruptcy attorney today.Share