Do you really need a bankruptcy attorney? And if so, why? We explain how having a lawyer during this time is beneficial to your situation.
Filing for bankruptcy is possible without an attorney.
At the same time, filing without representation isn’t necessarily a good idea – that’s why consumers used a bankruptcy attorney in 95.1 percent of all Chapter 7 cases filed in 2017.
If you are filing a complex Chapter 13 bankruptcy, you stand a much better chance of achieving a successful discharge when you have a representation. Even a relatively straightforward Chapter 7 filing benefits from professional legal advice.
What do bankruptcy lawyers do? Keep reading to learn more.
1. Establish a Repayment Plan
When you file for a Chapter 13 bankruptcy, you need to establish a feasible repayment plan and present it to the judge.
However, you need a significant amount of legal knowledge to do so successfully.
It’s also not possible with your home Quickbooks. You need software that acknowledges bankruptcy law – the software used by bankruptcy attorneys.
Additionally, if you are trying to discharge some of your mortgage or an automotive loan, then you must file a motion with the bankruptcy court. You will undoubtedly find this more manageable if you have representation to do this for you.
2. Determine Whether You Qualify (and Future Plans)
A Chapter 7 bankruptcy is often the preferable option because it allows you to pay down debt without losing assets like your house and car. However, not everyone qualifies for a Chapter 7 bankruptcy, and complicated cases may make who does and doesn’t qualify unclear.
If you have a high income, a significant amount of assets, or run a business, then you will benefit from a bankruptcy lawyer who can review your case.
Should an attorney determine that you don’t qualify for Chapter 7, they can advise on the next steps.
3. Help You Identify the Tax Consequences of Bankruptcy
For most people, bankruptcy is a tax-free way of eliminating debt. Why? Because typically, the IRS considers a canceled, forgiven, or discharged debt to be income. Each creditor who releases or forgives over $600 in debt then files a form 1099 that you must include on your tax return. However, the debt forgiven via bankruptcy proceedings doesn’t trigger the rule.
However, there are different tax rules for individuals in Chapter 7, 11, 12, and 13. If your bankruptcy is involved, then your tax returns after bankruptcy also become trickier.
The bottom line: You need good tax advice before you file for bankruptcy.
4. Win Your Case
You can create a compelling case all on your own and win, but in regards to the chances of your success, the statistics are overwhelming.
One out of three people who file their own Chapter 7 case loses. Among those who file for Chapter 13 alone, only one in 50 wins.
Use a lawyer, and you increase your odds. One out of 25 consumers who choose representation lose their Chapter 7 case, and forty percent of represented Chapter 13 petitioners win, too.
Get the Agreement You Need with a Bankruptcy Attorney
You aren’t required to have representation to file for bankruptcy, but it dramatically increases your chances of success if you do.
Bankruptcy lawyers help you determine what type of bankruptcy is right for you and predict future complications after you file. Plus, there are some elements of the case that are almost impossible to do successfully on your own, like creating a payment plan or outwitting your creditor’s lawyers.
Does bankruptcy look as though it might be on the table? Before you file, contact McFarlin LLP at 949-544-2640 for a free case evaluation.