Filing for bankruptcy is on the rise due to the current financial situation, but it is no longer as simple a matter as it once was. Whereas at one time there was only one type of bankruptcy to consider, and judges were very generous in dismissing debts based on their rules, there are now two different ways to file for bankruptcy under US federal law.
Since each type of bankruptcy is so different from the next, a competent and experienced bankruptcy attorney is needed so that the debtor can file correctly and have the opportunity to start over. There are also tax issues to consider as a result of filing for bankruptcy. Bankruptcy attorneys provide their clients with the necessary tax advice or may enlist the assistance of experienced colleagues in the fields of tax law and accounting to obtain competent professional tax advice related to bankruptcy filings.
Chapter 7 bankruptcy, in which all debts are discharged, is now only available to filers who can show that they do not have enough income to pay off any of their unsecured debts. This can be difficult to prove without the help of a trained bankruptcy attorney, who will represent the petitioner in court and provide clear evidence when he can show that Chapter 7 is, in fact, the correct option.
In the event that Chapter 13 bankruptcy, which requires arrangements to pay off a portion of the debt, is the right path for an applicant, a competent bankruptcy attorney will ensure that the judge approves a plan that allows the applicant the opportunity to rebuild and have the necessary means for an adequate and healthy life while making the necessary payments to reduce and pay off your debt.
Attempting to file without a bankruptcy attorney can lead to a judge ruling that Chapter 7 bankruptcy is not allowed in a case where an attorney could have legally and ethically made a compelling case for this type of bankruptcy relief. It could also lead to a stifling Chapter 13 settlement in which the debtor is left without enough funds to cover his or her basic needs. Such an agreement could force the debtor to breach his agreement and face serious consequences just because he is unable to support himself and his family under the agreement he accepted due to his unfamiliarity with the law and lack of legal advice.
Bankruptcy is a serious and complex matter, and a trained, experienced, and reputable bankruptcy attorney will ensure that the debtor can start anew.