When businesses or people are overburdened with debt and unable to make payments, bankruptcy is a legal option that gives them judicial protection from creditors and full or partial debt relief. In other words, it is intended to safeguard anyone battling a significant debt.
However, it is a federal crime when people exploit this provision by dishonestly filing for bankruptcy out of deception or to gain an unfair benefit. False statements or representations made during the bankruptcy process are illegal under 18 U.S. C. 157.
Under federal law, debtors who are currently unable to pay their bills won’t be able to do so in the future and can start over with a clean slate by having their debts discharged. However, the equitable division of the debtor’s remaining assets ensures that all lenders of money to the debtor are safeguarded to the fullest possible extent.
To guarantee that a sizable amount of the debtor’s estate is given to the unpaid creditors, the federal bankruptcy statutes are intended to foster honesty and transparency in the bankruptcy process. In this regard, legal experts, bankruptcy lawyers, and attorneys play a pivotal role.
Just as the bankruptcy procedure is meant to aid individuals needing financial assistance, some try to take advantage of the system by committing bankruptcy fraud. If you are accused of this offense and are found guilty, you risk receiving hefty penalties and jail time. Competent and experienced federal criminal defense attorneys will go through this provision more in-depth.
By selling assets to pay debts or by coming up with a repayment plan, bankruptcy enables those unable to pay their bills to start over. Bankruptcy rules also protect businesses in financial distress. The legislation and bankruptcy process are explained in this section.
A person can benefit from filing for bankruptcy by getting rid of debt or by creating a repayment plan. The debtor often files a petition with the bankruptcy court to start a bankruptcy proceeding. A petition may be submitted by an individual, a couple filing jointly, a business, or another legal body.
The U.S. Bankruptcy Code specifies the procedures for handling all bankruptcy matters in federal courts and how a bankruptcy lawyer can help in bankruptcy cases.
1. A bankruptcy lawyer can make the proceedings simple
A bankruptcy lawyer is an attorney who advises clients regarding bankruptcy, drafts their legal documents, and appears on their behalf in court. A lawyer must have a law degree and be admitted to practice in the state where they conduct business.
You can regain control of your finances by filing for bankruptcy. However, managing the bankruptcy process alone might be difficult, given that a bankruptcy petition contains legal issues. Thus most experts advise hiring a bankruptcy attorney to handle your case.
2. A bankruptcy lawyer will prepare complex and complicated documents
You should get familiar with the Bankruptcy Code and the federal regulations governing the bankruptcy process before taking any further action. Just like a bankruptcy lawyer is expected to do, the federal court hearing your case will expect you to adhere to the relevant bankruptcy laws and regulations. It’s important to note that the Bankruptcy Code and federal regulations are written in a manner that judges and attorneys will recognize but that the typical citizen won’t.
3. What type of bankruptcy you are facing
Almost six bankruptcy categories are outlined in the United States Bankruptcy Code. But when an individual files for bankruptcy, cases frequently fall into two categories: Chapter 7 or Chapter 13.
Debts are erased under Chapter 7, sometimes referred to as liquidation bankruptcy. It is intended for those who have experienced difficulty making their regular debt payments. A court-appointed trustee liquidates your assets in a Chapter 7 case, sells the proceeds, and distributes the money to your creditors. Some things, like your automobile or furniture for your home, can be exempt. Once Chapter 7 is complete, you are no longer liable for any of the debts included in the bankruptcy case. The whole bankruptcy proceeding is a complex and complicated process, and by appointing a bankruptcy lawyer it is simplified for the victim.
4. Appointing a bankruptcy lawyer gives you peace of mind
Being in court alone might be intimidating; a bankruptcy attorney can handle the legal issues on your behalf. There are usually numerous papers involved in court trials. For instance, submitting documentation beyond the due date or filling it out wrong could jeopardize your bankruptcy case. A bankruptcy attorney may manage all of the paperwork, including any required submissions of documents (such as credit card statements).
5. You’re tired of hearing from debt collectors
A bankruptcy lawyer can handle debt collectors if they are bothering you nonstop. When you inform a debt collector that you have legal representation, the collector is supposed to speak to the lawyer instead of you.
6. Go Through Credit Counseling
Remember that before you can file for bankruptcy, federal law mandates that you attend credit counseling from an approved source. 180 days must pass before doing this and declaring bankruptcy. You will be given a certificate once the credit counseling is over, which you must include with your bankruptcy file.
7. Meet With Creditors
You will normally work with a court-appointed bankruptcy trustee once the court approves your bankruptcy case. Typically, you will have little contact with the bankruptcy judge assigned to your case. Most of the time, a 341 Meeting with creditors is the only official proceeding you are required to attend. Remember that you cannot receive legal advice from the bankruptcy judge or court personnel.
Conclusion
Choosing to file for bankruptcy is important. After all, depending on the type of bankruptcy, a bankruptcy filing stays on your credit report for seven to ten years. Think carefully about whether you want to handle your bankruptcy on your own, which is a more difficult option, or whether you want to hire a lawyer. Whether you choose Chapter 7 or chapter 13 bankruptcy, you can start again with your financial management.
A new requirement that attorneys must conduct “reasonable inquiry” to ensure that the “material contained” in bankruptcy petitions and schedules is “fully grounded in reality” is especially concerning to bankruptcy lawyers. In other words, a lawyer must independently verify all of the client’s facts since they will be held personally accountable for any inaccuracies made by the client. The lawyer would also need to look into all the assets that the clients have listed. This, along with two other elements of the new bankruptcy legislation, is opposed by the American Bar Association.
