It almost seems counter intuitive that there would be such a large number of costs associated with bankruptcy, something done when people are pretty much insolvent.  Unfortunately, the price of declaring bankruptcy can be very high.  The more complicated your financial situation, the more you can expect to pay.  But everyone will pay something.  However, most people still find the long term savings to be greater than continuing with their current state of debts.

When filing bankruptcy, you will at the very least have to pay filing fees.  Most people will also end up paying an attorney to help them along in the process.  If you are willing to put in the time and effort, and if you situation is not overly complicated, you should be able to save thousands of dollars by doing the work yourself.

If you situation is a little more complex, you will probably save money in the long run by hiring a professional bankruptcy attorney.  These lawyers specialize on bankruptcy matters and have spent years studying the laws and wading through the bureaucracy that is the court system.  One mistake made when filing papers can cause you a whole lot of problems and professionals can avoid this.  A single mistake can cost as much as hiring an attorney, so if you aren’t absolutely sure of your abilities to fill out and file the papers correctly, you should seek professional help.

Even if you are familiar with bankruptcy, new laws are being enacted all the time.  Only those who spend their time keeping up with these changes have the least idea about the current rules and regulations.  For example, new bankruptcy laws require you to attend counseling before filing.  After filing, you will have to attend classes to learn how to handle your finances.  These are additional costs associated with filing bankruptcy.

Laws dealing with bankruptcy are not the same across the country.  Each state has its own particular laws and requirements.  The one thing they all have in common is that they want your money and you will have to pay to file.  Even filing and court fees can amount to thousands of dollars.  A bankruptcy attorney can help you minimize these costs by advising you what is absolutely necessary.

There are costs associated with bankruptcy that have nothing to do with money.  The damage you will do to your credit rating is immense.  After filing, you will basically have no credit at all.  You will have to begin to once again slowly build your financial trustworthiness.  This can takes several years and during that time getting credit of any kind will be very difficult.  If you do get a loan you can expect to pay high interest rates.  Even finding a job can be difficult since many employers check employees’  credit histories.

Based on the substantial costs associated with bankruptcy, you can see that information is critical.  Though an attorney’s help is not required by the court, you will likely save time and money by using their service.

Bankruptcy confirmation is required under the United States Bankruptcy Code for all debtors filing Chapter 13 protection. Commonly referred to as “reorganization bankruptcy”, debtors must submit proposed repayment plans at the time of filing or within 15 days of petitioning the court.

The purpose of bankruptcy confirmation hearings is to ensure debt repayment plans adhere to new bankruptcy laws. Chapter 13 payment plans must include payment amounts to each creditor along with payment dates.

Once bankruptcy refinance plans are approved, debtors submit payments to the court Trustee. Chapter 13 payments are generally paid on a bi-monthly or monthly schedule. Trustees distribute payments to creditors until debts are repaid.

Shortly after bankruptcy petitions are filed, notification to creditors is sent out to inform them of the bankruptcy filing and scheduled date of the 341 creditors meeting. 341 meetings give debtors the opportunity to meet face-to-face with creditors and explain their financial situation and ability to repay debts. Creditors can agree to accept a reduced payoff, lower interest rates, or remove late fees and penalties.

Information obtained at creditor meetings is given under oath. Debtors who provide false information are subject to criminal charges and their petition of bankruptcy will be denied.

In 2005, Congress enacted new bankruptcy laws which have made filing bankruptcy protection more difficult. The Bankruptcy Abuse Prevention and Consumer Protection Act require debtors to repay a portion of their debt and undergo credit counseling.

Few people can abide by BAPCPA regulations without legal counsel. Unfortunately, locating bankruptcy attorneys has become more challenging and expensive because the new laws hold lawyers accountable for information provided by their clients.

Several bankruptcy lawyers changed to other legal fields; leaving a deficiency of lawyers willing to assist with petition filings. Those who have remained in this field of law charge higher fees to cover increased business insurance premiums and potential litigation fees.

Debtors filing for Chapter 13 bankruptcy are required to undergo the means test to determine the amount of debt to be repaid. The means test compares debtors’ income to that of their states’ median income level.

When income is equal to or greater than median levels, debtors must file Chapter 13 and develop a confirmed debt reorganization plan. If income falls below median income, debtors might qualify for Chapter 7 which discharges all outstanding debts.

Bankruptcy repayment plans typically extend between three and five years. Debtors are prohibited from incurring new debt during the repayment period without court authorization. Chapter 13 payments are in addition to normal household expenses. One unexpected expense could cause debtors to fail out of bankruptcy.

If debtors are unable to adhere to bankruptcy repayment plans, creditors can petition the court seeking dismissal. If approved, debtors lose protection from the court and creditors are allowed to proceed with collection actions.

Bankruptcy confirmation can help debtors overcome financial hardships. However, individuals should become informed about the advantages and disadvantages of this action. Research bankruptcy alternatives including: debt consolidation, debt settlement, credit counseling or budgeting, to determine if similar results can be achieved.

The process of considering the bankruptcy application by the court involves some tedious procedures. For example, application can be made under Chapter 7 or Chapter 13. In some cases, individuals can file application under Chapter 7 also. All these involve thorough law governing the bankruptcy.

Procedure for filing application:

An individual would find it difficult to cope with the legal formalities involved in such cases. On the top of it, in the year 2005 the bankruptcy law has been amended. The revised law has some stringent clauses and procedures which are required to be followed. So, only a person who has knowledge of the law and the legal procedure would be the most appropriate person to take up such cases. Here comes the need for appointing an attorney. There are attorneys who are specialized in bankruptcy law. So it is advisable to hire the services of the ‘Bankruptcy attorney’.

Bankruptcy attorney:

Being specialized in the bankruptcy law, the attorney will be able to guide the client properly. It is a ladder to be climbed step by step. He would ensure that every procedure is properly followed and appropriate documents are furnished so that the applicant is not put to hardship under any circumstances. Of course he would charge consultation or professional charges for the services he has rendered.

Some people feel that the professional charges would further burden them because they are already debt ridden. But this does not seem to be logical thinking because the individual will not be conversant with the law and if he approaches the court directly, he may not get the desired remedy. So it is wise to engage the attorney and his professional charges may not be a burden; considering the relief he gets from the court. Therefore, taking in view the long term benefit the applicant would get, it is always appropriate that the applicant should hire an attorney.

A word of caution!

Before engaging the attorney, discuss the matter thoroughly with the attorney including that of his professional charges and the mode of payment and the payment schedule. Normally the attorney would prefer the applicant to enter into an agreement with him. In such cases, carefully read the terms and conditions before signing the agreement.

Too much debt can bring a devastating result in a company’s or an individual’s life. Providentially, bankruptcy laws exist to bring respite to the person who is overburdened with debt. There are different chapters of bankruptcy laws for different circumstances. The laws also keep changing and if you are planning to seek bankruptcy then you must have knowledge about all that is required. Alternatively, you can hire an experienced and smart attorney who can deal with your case of bankruptcy without any problems. But the question is how you would know that which bankruptcy attorney would be right for you.

You must first look forward to get a recommended bankruptcy lawyer. You may ask a friend or acquaintance to refer one to you. If you do not get it by referral, try Yellow Pages where you’ll find lawyers that are grouped according to specialty. You can also go for debt relief agency. You may first call the bankruptcy lawyer and talk to him about the problem. A lot of bankruptcy lawyers offer free initial consultation. After speaking with two or three bankruptcy lawyers, fix a meeting with one with whom you identify your self. Think about how much experience the lawyer has and whether he specializes in bankruptcy laws or not. Also ask him whether he will be handling the case himself or will hand it over to a paralegal or associate. You can also ask the lawyer if you could play him in installments.

After choosing a suitable lawyer, fix an appointment and meet him and discuss your case in detail. Make sure that you do not hide anything from the lawyer. Ask them to pay individual attention to your matter. Ask about how much fees he/she would be charging along with all the paperwork. If you think that the bankruptcy lawyer is asking for a very low fee, and then please think about your choice again as he/she may not be aware of all the laws.

Bankruptcy should be a matter of very high importance and serious consideration for you. Even though a lawyer is not important for filing bankruptcy petition but the kind of paperwork involved can be complex. So it is recommended that do not try it yourself. After all, bankruptcy may have far-reaching ramifications. A bankruptcy attorney is inevitable to get you through it.

If you’re in debt, you probably know you’re not alone. In today’s tough economy, millions of consumers owe money, and as a result, there are many different debt options to help them recover. The trick is to find the option that works best for you, and the truth is, there’s no clear winner. While an approach such as debt settlement might work for some, credit counseling might work better for others. It all depends on each one’s particular case.

Filing bankruptcy is another alternative to getting a “fresh start”, but due to the New Bankruptcy Law, going bankrupt has become more complex and expensive than ever before. The new law that went into effect in 2005 added new requirements and regulations that have made the process of filing bankruptcy more complicated.

Less Consumers Will Be Given A “Fresh Start”

According to the new law, consumers with an income higher than the median for their State won’t be allowed to file under Chapter 7 and see most of their debts cancelled. Instead, they’ll need to file under Chapter 13 and commit to a repayment plan. This repayment plan could last up to five years.

More Consumers Will Have To Live With Less

While under the old law the court decided what were basic living expenses in order to calculate a debtor’s disposable income, under the New Bankruptcy Law, the IRS will make this decision for all debtors whose income is higher than the median for their state. Doesn’t seem like a big deal, does it? The problem is that actual living costs are generally higher than the allowed expenses established by the IRS.  This means many debtors will have to live on less money since, for instance, internet, cable, and eating out might not be regarded by the IRS as basic needs.

Consumers Will Need To Spend More Of Their Time and Money

Under the new law, consumers will need to take Credit Counseling and money management classes within the six months before filing. Needless to say, they must pay for these services. Moreover, Bankruptcy Attorney fees are higher than what they used to be. Why? Simple: the new law requires a Lawyer to vouch for the precision of his client’s paperwork. Any inaccuracies could mean he’ll be fined. Thus, there’s more liability involved in each bankruptcy case, and with more liability comes more time devoted to each client and, as a direct consequence, higher fees.

Is Filing Bankruptcy Your Best Option To Getting Out of Debt?

Sometimes it’s just the last resort. Keep in mind there are other debt options to fix your finances. Approaches such as debt settlement and credit counseling have proven to be effective in many cases. However, sometimes a consumer is so deeply in debt bankruptcy truly is the only option he has.

Because every case is different, I advise you to keep researching about your different financial options. If bankruptcy is a path you’re seriously considering taking, contact a Bankruptcy Lawyer to examine your case in detail. Don’t jump into any decision yet. Take the time to analyze your situation and the results of choosing one financial alternative over another.