Personal Bankruptcy Lawyers

The primary role of personal bankruptcy lawyers is to advise and represent debtors who decide to file petitions for insolvency. While some claim that debtors can handle filing detailed financial data themselves, lawyers are hired to ensure that petitions are not only filed correctly, but also that petitioners are afforded every right available under U.S. Bankruptcy Court law. Most consumers are unfamiliar with legal proceedings and court-ordered judgments; and many would be at a loss in the courtroom. Whether petitioners choose to file Chapter 7 liquidation cases, Chapter 11 business restructuring plans, or Chapter 13 petitions to repay creditors from wages earned, they must meet certain criteria. Without an understanding of legal proceedings and applications, debtors could easily wind up losing valuable assets, such as cars, residences, and business and personal property to creditors. While the law does not prohibit debtors from filing consumer debt protection on their own, personal bankruptcy lawyers are adept at interpreting the law to clients and can help prevent debtors from making poor judgments and filing inaccurate reports, which may work against them in a courtroom full of creditors.

Filing bankruptcy is not a do-it-yourself project. Just compiling listings of assets and liabilities can be a daunting task for the average consumer. Personal bankruptcy lawyers can provide expert legal counsel to determine whether a debtor should consider filing for consumer debt protection or not. Sometimes cash-strapped consumers see no way to circumvent repossessions and harassment from bill collectors without taking their case to court. But a reputable attorney should give debtors some viable options and advise for or against taking the desperate measures preparing and filing petitions entails. The attorney works for a fee, but he or she will also work on behalf of the client, poring over financial information and assessing whether the client has strong supportive evidence to pass the muster of the court. While personal bankruptcy lawyers are debtors' advocates, God has provided an Advocate far more powerful than any earthly lawyer in the person of His Son, Jesus Christ. "My little children, these things write I unto you, that ye sin not. And if any man sin, we have an advocate with the Father, Jesus Christ the righteous. And He is the propitiation of our sins: and not for ours only, but also for the sins of the whole world" (1 John 2:1-2).

Astute personal bankruptcy lawyers' first consideration will be to discuss which type of filing best suits client needs. Chapter 7 liquidation petitions require a court-ordered sale of assets to amass sufficient monies to pay off creditors. Consumers who own real property, stocks and bonds, securities, vehicles, or equipment which can be converted into cash to repay delinquent accounts are most likely to choose Chapter 7. A U.S. Bankruptcy Trustee is appointed to collect, liquidate, and dispense debtor assets to satisfy secured and unsecured creditor claims. For debtors who don't have many assets, but work a 9-to-5 job, personal bankruptcy lawyers will usually advise filing Chapter 13, or a wage earner petition. Chapter 13 wage earners have a regular income from which to pay creditors in compliance with a court-ordered repayment plan. Legal counselors will advise clients about formulating a plan which demonstrates to the court a commitment to restructure outstanding debt over a three to five year term. Once the court and creditors accept a wage earner's plan, debtors filing Chapter 13 petitions are subject to court-ordered payments dispensed by U.S. trustees or administrators. For up to five years after filing, debtors should refrain from incurring more liability. Trustees are there to help monitor the debtor's finances and ensure that the court's decisions are upheld.

Meanwhile, personal bankruptcy lawyers are there to help protect the interests of the debtor and to ensure that the court does not infringe on the debtor's legal rights, such as issuing orders that monies used for the client's subsistence become part of disposable income. In addition to helping debtors determine the most appropriate petition to file, attorneys also assist debtors with filing public notices of bankruptcy; provide expert legal representation at creditor and confirmation hearings; communicate and correspond with creditors regarding secured and unsecured claims, and resolve discrepancies between debtors, creditors and the court, which can arise any time personal finance is an issue. Attorneys can also stop garnishments, repossessions, and foreclosures and help petitioners keep exempt property, such as real estate holdings used as personal residences, automobiles used for work, and spousal property. Once lawyers file and serve a notice of bankruptcy to the debtor's creditors, all collection tactics and harassment must cease.

Having personal bankruptcy lawyers relieves debtors of the stress and anxiety associated with filing. Petitioning for consumer debt protection can be exhausting and intimidating; and a debtor needs a powerful ally to battle hostile creditors and defend a legal right to debt protection. But simply having professional legal representation enables debtors to breathe a little easier, in spite of an overwhelming money woes. The case is presented before the court with precision and with an anticipation that the court system will render fair and equitable judgment on behalf of both the petitioner and the creditors. Attorneys have the client's best interests at heart and are ever present to assure that assets are protected and that creditors and debtors are both treated fairly. An intimidating process like filing for insolvency requires experience, knowledge, wisdom and an astute application of jurisprudence. Debtors who can afford to hire competent legal assistance to present consumer debt protection cases to the U.S. Bankruptcy Court should be appreciative and thankful for a system which protects and defends the legal rights of its citizenry, in spite of an inability to maintain financial solvency.

Personal Bankruptcy Laws

Personal bankruptcy laws were created to protect the consumer and creditors. It provides a way for individuals suffering from extreme financial debt to reconcile personal debts and start again. The laws also exist to return at least some money owed to creditors, who often take a total loss when debtors default. These laws fall under Title 11 of the United States Code and are handled through federal district courts. Individuals can file under Chapter 7, choosing to sell assets in order to pay what is owed, settling the debt in four months or under Chapter 13 where they propose a three to five year repayment plan, usually covering only a portion of the debt. Debtors can choose to declare some or all current debts. After either process is complete, the declared debts are wiped clean.

The history of personal bankruptcy laws dates back to biblical times, when Moses declared the "year of jubilee." Every seventh year, the Israelites were to give their land and animals a year of rest or a "sabbath." After seven sabbath years, or 49 years, the whole nation enjoyed a year of freedom from all debt: loans, borrowed possessions, and slavery. "And ye shall hallow the fiftieth year, and proclaim liberty throughout all the land unto all the inhabitants thereof: it shall be a jubile unto you; and ye shall return every man unto his possession, and ye shall return every man unto his family... And if thy brother be waxen poor, and fallen in decay with thee; then thou shalt relieve him: yea, though he be a stranger, or a sojourner; that he may live with thee." (Leviticus 25:10, 35) It was a year of redemption, a year of starting over.

Laws have changed quite a bit since then. Individuals can file under Chapter 7 again after six years and under Chapter 13 any time. Many critics of personal bankruptcy laws in the United States claim that filing bankruptcy has been too easy on debtors. Bankruptcy filings in the 1980s and 1990s increased 300%. By the year 2000, millions of dollars each year were being lost in bankruptcy proceedings. Many Americans file after a personal crisis - a medical problem, divorce, or natural disaster. But thousands fine themselves in financial despair simply by overspending. This has caused concerned for many lawmakers, who tried for years to amend bankruptcy law to protect it from abuse.

On October 17, 2005, these lawmakers found victory in the Bankruptcy Abuse Prevention and Consumer Protection Act. This amendment to personal bankruptcy laws makes it more difficult for individuals to file under Chapter 7. Unlike past years, where a judge was the sole determinant of whether someone could file, debtors now have to pass a two-part test to qualify for Chapter 7. Salary is compared to a state median income as determined by the Internal Revenue Service (IRS). If a person falls below that median, he or she may qualify. A debtor's income also must leave less than 25% available to pay for non-secured outstanding debt. The formula allows for exemptions for needed expenses such as housing and food. But the intent of the additions to personal bankruptcy laws is to only make Chapter 7 filings available to those who really need it and forces everyone else to file under Chapter 13 thereby keeping them responsible to repay at least a portion of personal debt. Natural disasters and some other personal hardships can be taken into consideration.

The new act also incorporates other steps to help prevent further financial problems. Within six months before filing, individuals must meet with a credit counselor for a 90-minute session in the district where the bankruptcy will be filed. Before the debt is discharged further counseling sessions or money management classes are required. All expenses must be paid by the debtor. Some argue that most people filing for bankruptcy can't afford such classes and that they create a further hardship. Fees for filing under personal bankruptcy laws (around $200 to $300) can be made in payments to help alleviate some of the financial pressure, but installments are limited and must be paid within 180 after filing. Fees may be waived if the debtor's income is less than 150% of the poverty line. However, attorney fees must be paid and since the induction of the law, rates have increased 75% to 100%.

The new personal bankruptcy laws also put greater restrictions on homestead exemptions. Most states allowed individuals to protect home equity from creditors. Now, the law gives freedom for the states to impose individual restrictions. In some states, the debtor has the option to choose a state exemption over a federal exemption or vice versa. However, a filer must have lived in that state for a minimum of two years for state exemptions to apply. Individuals who file under Chapter 7 still risk losing their homes in the liquidation. Filers under Chapter 13 can usually retain them as long as they continue to make mortgage payments on time during the length of proceedings as well as other debt obligations under the written agreement.

Individuals who file under Chapter 7 or Chapter 13 of the personal bankruptcy laws work with a court-appointed trustee who manages the financial transactions with creditors. This impartial trustee meets with creditors, asks questions of both parties to reach a mutual plan of action, and makes sure that each party holds up the contract. When the terms of the plan have been fulfilled, the debtor is released from all remaining obligation to the creditor and then has the opportunity to start again.

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