Deciding to seek bankruptcy protection is a difficult decision that is often reached only as a last resort. Still, one of the biggest mistakes people make when applying is waiting too long. Valuable resources can be spent trying to pay off creditors and keep the business afloat, which can ultimately hurt your chances of qualifying for protections.
A second, but equally big, mistake is trying to manage the process yourself. Cash-strapped individuals and businesses are often looking for ways to save money and cut costs, but refusing to hire bankruptcy attorneys to represent you could end up costing you much more in the long run.
Different types of bankruptcy
There are several different types of bankruptcy options. Chapters 7, 11 and 13 are the most common. Chapter 7 is used in asset liquidation and is most commonly used for individuals. Chapter 11 is open to both businesses and individuals, and Chapter 13 is open to individuals who wish to pursue a debt restructuring program and protect existing assets rather than liquidate their assets.
Nuances of legal representation
Sometimes it can be difficult to determine if you need legal representation. The paperwork seems straightforward and your case is simple, so you might consider representing yourself in court. This is allowed in Chapter 7 and 13 cases, but Chapter 11 cases require legal representation.
Although debtors can represent themselves in court, it is very difficult to do so successfully. The legal process is complex even in the best of situations. When business and personal finances come into play, the technicalities and complexities increase even more. It is vital to the success of your case to have experienced bankruptcy attorneys representing you who can properly present and handle the case. A mistake as simple as forgetting to file a form can cost debtors their right to a case. The short-term and long-term financial consequences are too great to risk representing yourself. Bankruptcy attorneys are experts at evaluating situations on a case-by-case basis and then recommending an appropriate course of action.
find a lawyer
Finding an attorney is as simple as contacting your state or local bar association. Most groups have a search function on their website that allows you to find attorneys who are experienced in your type of situation. If you are concerned about the cost, contact the association. You may be able to find free attorney services or even law schools that offer pro bono work. The court system is also a good way to find free services and/or bar associations.
If you’re in financial difficulty, don’t try to work it out on your own. Many attorneys offer free consultations and can tell you if filing is a right option for you, your chances of a successful resolution, and the costs involved. They may even recommend alternatives, such as mediation or debt settlement, if you talk to them before things get too bad.