The purpose of bankruptcy law is to give an unfortunate, but honest debtor “a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.”Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934). For individuals and families, there are two types of bankruptcy proceedings available: Chapter 7 and Chapter 13. The former provides an orderly liquidation of your estate, where a US trustee takes over the assets of the estate, reduces them to cash, and distributes it to creditors subject to certain property exemptions. The latter provides a process where you will propose a ‘plan’ to pay off a portion of your debts to your creditors over a period of time, while still maintaining possession of your property. At the end of each process, your debts will be discharged.
When would bankruptcy be a good option?
Bankruptcy is an option of last resort, and should only be used when you are subject to debt collection or foreclosure proceedings, and you have no financial means to pay off your debts. This is especially needed if you are supporting a family, and own a house because the law provides special protection and exemptions for you. The effect of filing for bankruptcy stops any debt collection proceedings ongoing, so it is best to file prior to any foreclosure, levy, replevin, or lien actions are taken against you.
How to prepare for it
Filing for bankruptcy can not be done overnight, so you must prepare yourself prior to your first consultation. Such preparations should include compiling a packet of identity, asset, and debt documents as listed below:
What we will do
After an initial consultation and a decision to file for bankruptcy, we will assist you in collecting the necessary documentation and filling out the necessary forms to apply. Once complete, we will file for bankruptcy in the bankruptcy court, guide you through the process, advocate on your behalf, and negotiate the best possible settlement with your creditors and the US trustee.