After seeing several years of decline, bankruptcy rates in the United States for both businesses and individuals increased last year and continue to rise.
In 2023, business bankruptcy filings increased 40 percent from the year previous. Individual (non-business) filings increased 16 percent from 2022.
Although the bankruptcy process helps individuals discharge debt — particularly after unexpected financial shocks like medical care expenses — the process can be emotionally taxing.
Declaring bankruptcy is a significant legal decision that can have long-lasting financial consequences for your business and personal finances. Since bankruptcy laws can be complex and vary by state, it’s important to seek the advice of a qualified bankruptcy attorney who can explain your options and guide you through the process.
Bankruptcy Attorney – What to Know
- Types of Bankruptcy – There are several types of bankruptcy, but the most common for individuals are Chapter 7 and Chapter 13. Chapter 7 involves liquidating assets to pay off debts, while Chapter 13 involves creating a repayment plan.
- The Impact on Debts – Bankruptcy can help discharge certain debts, meaning you are no longer legally obligated to repay them. However, not all debts can be discharged, such as student loans and certain tax debts.
- Assets and Exemptions – In Chapter 7 bankruptcy, some of your assets may be sold to pay off debts. However, you may be able to exempt certain assets, such as your primary residence and personal belongings, depending on state laws.
- Impact on Credit Score – Bankruptcy can have a significant negative impact on your credit score and can stay on your credit report for several years, making it harder to get credit or loans in the future.
- A Detailed Legal Process – Declaring bankruptcy involves a legal process that typically requires filing paperwork with the bankruptcy court, attending a meeting of creditors, and complying with the court’s orders.
- Look at Alternatives – Bankruptcy should be considered a last resort. There may be alternative options, such as debt consolidation or negotiation with creditors, which could help you manage your debts without declaring bankruptcy.
What to Look for In a Bankruptcy Attorney
When selecting a bankruptcy attorney, it is important to do your homework. Remember, you are entrusting your company’s or personal financial revival to them. By considering these factors, you can select a bankruptcy attorney who is well-suited to handle your case and guide you through the bankruptcy process.
- Do They Have Experience – Look for an attorney who specializes in bankruptcy law and has years of experience handling cases like yours.
- What is Their Reputation – Check online reviews, ask for referrals, and research the attorney’s track record of success in handling bankruptcy cases.
- Communication – Choose an attorney who is responsive and communicates clearly, keeping you informed about your case’s progress and explaining complex legal concepts in a way you can understand.
- The Fee Structure – Inquire about the attorney’s fee structure upfront, including any retainer fees, hourly rates, or flat fees for bankruptcy services. Make sure you understand what services are included in the fees.
- Professionalism – Choose an attorney who is professional in their demeanor and approach, and who treats you with respect and empathy.
- Accessibility and Compatibility – Select an attorney that is accessible when you need them, either through phone, email, or in-person meetings. Also, choose an attorney with whom you feel comfortable discussing your financial situation and who you believe will represent your interests effectively.
The Manning & Clair Difference
The attorneys at Manning & Clair have extensive experience providing clients navigate the bankruptcy process. Should you need expert assistance identifying the best path to follow when making this important decision, put our knowledge to work for you.
Manning & Clair Note: The information shared here is intended for a general overview and discussion of the subject. It is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. Please consult an attorney for advice about your individual situation