People take loans to meet different financial needs such as debt consolidation, paying medical bills, and improving a business. These loans are usually accompanied by collateral, which can be forfeited if they cannot repay the loan. Sadly, some borrowers end up facing worse circumstances like loss of a job, overextended credits, substantial medical bills, or marriage issues, which affect their ability to pay the borrowed funds. To protect their property and get their debts discharged, most borrowers file for bankruptcy proceedings. However, bankruptcy is a stressful process that needs careful considerations. And many times, it requires the help of experts.
If you are currently facing bankruptcy, read on to know how a professional could be of help.
To Provide Emotional Support
The fact you have accumulated huge debts and unable to pay back may lead you to psychological stress. You need someone to support you psychologically and help you sober up. After settling upstairs, you will be in a position to identify the issues that caused your repayment failure and develop strategies for approaching them positively. Additionally, seeking help will help you think of other viable alternatives you can use to secure your credit rating other than destroying it through the bankruptcy process. As TL Brown Law Firm experts mentioned, a bankruptcy attorney can help you find alternatives to help you avoid a bankruptcy filing at all costs. Ultimately, you will be in a position to perceive your huge debt with positivity other than blaming yourself for failure.
To Help You Gather the Relevant Information
The bankruptcy process may be complicated for you to go through independently. You may need a bankruptcy attorney's assistance to understand the rules and regulations governing the bankruptcy proceedings. Moreover, the attorney will also equip you with the requirements that you must meet before filing for bankruptcy proceedings. For instance, you must provide sufficient proof that you can't provide for the loan. You must also produce evidence that you went through complete credit counseling with a government-approved credit counselor and found bankruptcy the only viable option for your financial issues. With this information, it would be easy to gather the relevant documents and file the proceedings.
To Assist in Deciding the Type of Bankruptcy
Typically, bankruptcy proceedings come in two main types, chapter 7 bankruptcy, and chapter 13 bankruptcy. You will need to be specific in the kind of bankruptcy to file. You can use either type to get rid of unsecured debt, stop repossession, and halt wage garnishments, debt collection actions, and utility disconnections. However, the two types differ in terms of costs charged in the court the attorney fees. Moreover, they use different approaches to relieve debt. A reliable attorney will take you through each of these bankruptcies and advise on the best course. Most loan borrowers go for chapter 13 bankruptcy as it is a more favorable option. For instance, it can give you a chance to cover the loan partially or in full and retain your assets.
To Assist in Deciding the Type of Bankruptcy
After filing the bankruptcy, you will need to familiarize yourself with the various terms used in a bankruptcy proceeding to increase your debt discharge chances. A bankruptcy lawyer can help you understand these terms to defend yourself in the court effectively. Examples of these terms may include:
- Bankruptcy trustee - refers to the bankruptcy court's person to represent creditors in the proceedings. Under chapter 7 bankruptcy, they will review the petition, liquidate the property, and give the creditor proceeds. Chapter 13 will analyze the debtor's repayment plan, receive the repayments, and distribute them to the lenders.
- Credit counseling - is an essential requirement before filing bankruptcy to show you exhausted all other options with an expert and found bankruptcy the only way out. After filing, the court also needs you to complete counseling on personal finance management before your debt gets discharged.
- Discharged bankruptcy - this is a reference term for completed bankruptcy proceedings. It happens when all assets have been seized to compensate the creditors under chapter 7 or satisfy your repayment under chapter 13.
- Exempt property - refers to the property in which the law prohibits creditors from seizing to provide for the loan. The property comprises items that help the debtor in achieving their most basic needs.
Other complex terms may include a lien, liquidation, means test, reaffirmation account, and secured debt. The lawyer can take you through each to help you understand better.
To Update You on the Progress of the Proceedings
The bankruptcy court allows for representation in court. Thus, you can hire a bankruptcy lawyer's services always to represent you in court as you concentrate on your essentials. The law attorneys will update you on the progress of the court proceedings. A professional bankruptcy attorney will also advise you on how they are effortlessly working to gain victory over the proceedings. For instance, your lawyer may liaise with the creditors' attorney to give you an upper hand in the proceedings. However, this is highly discouraged in courts since justice must be upheld.
To Prepare You on the Most Probable Outcomes
While bankruptcy proceedings can discharge many debts, there are some unforgivable debts where bankruptcy doesn't apply. These debts may include student loan debts, court alimony, child support, tax lien, and government fines and penalties. Your attorney will advise you on the outcome of these debts and advise you on the most viable approach. They may also represent you in the court to have your payment period extended to avoid losing your property. They may also use their professionalism to approach your creditors and request a more manageable repayment plan other than defaulting and losing credit score.
Failure to pay your loan will adversely impact your credit score. Though some forms of debt relief, such as declaring bankruptcy, may help discharge a debt, they may cause you dire consequences in the future. Before filing for bankruptcy, research all available alternatives to avoid losing your debt finance credibility. An effective way of getting alternative financial relief is seeking the advice of an approved financial counselor. Alternatively, you can prevent debt accumulation by upholding the timely payment of bills, monitoring your credit score, sticking to a budget, avoiding unnecessary spending, and avoiding many loans.