Bankruptcy Basics


The word bankruptcy has several negative connotations attached to it. Many people are afraid of the word because they have the idea that it is associated with losing everything they have worked so hard to gain.

In reality, a bankruptcy is a form of consumer protection law designed to allow the cancellation or lowering of certain debts. While it is true that a bankruptcy can affect a person's credit score, it should be remembered that credit scores are fluid and can always be repaired, but generally not until the person in debt has the opportunity to begin the repair process.

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When a person files for bankruptcy, they initiate an automatic freeze against debts owed. Lenders and creditors are not allowed to contact the debtor for any reason relating to the debt and, more importantly, may not request re-payment of debts. The person may eventually be released from obligation to repay the debt or they may be able to restructure and reconsolidate their debt at a lower amount than they once owed.

There are plenty of folks who have successfully filed for bankruptcy on their own, but it is almost always in the best interest of the debtor to retain the services of specially trained bankruptcy lawyers. A lawyer can provide information in a way that is non-threatening and easy to understand. Bankruptcy lawyers also act as a kind of assistant through the entire process, explaining the process along the way and completing tasks associated with the process on behalf of the debtor. This allows the debtor to focus on making changes to improve their situation, instead of being tied up with trips to the court house for forms or reference materials.

In some instances, bankruptcy lawyers may advise against attempting to file for bankruptcy, especially if the person is better off than he or she would like to think. Lawyers can advise their clients on bankruptcy information and keep them up to date of any changes to the law that would affect their decisions.

Even though having multiple debts can appear overwhelming to the average person, they are often manageable if the person in debt is given a little extra time to come up with a plan to reduce the debt. Forming a plan, however, can be difficult with creditors and lenders throwing around threats of wage garnishment or lawsuits. Officially filing for bankruptcy will allow the consumer enough time to focus on a plan to tackle the entire debt, not just the monthly minimum payments. The person who is being pushed further and further into a corner by collection agents may notice a weight being lifted from their shoulders as soon as the collectors are ordered to cease collection attempts.

Making the decision to file for bankruptcy can be confusing and scary, but making the decision not to file can have implications far more detrimental to the debtor than feelings of confusion and fear. If legal costs are deterring a person from hiring a lawyer to help them through this process, the person should keep in mind that bankruptcy lawyers deal with clients in the same position on a daily basis. Law firms that specialize in bankruptcy cases can explain to prospective clients what their options are in paying for a bankruptcy lawyer. The most important thing to remember about the entire bankruptcy process is that options are available.


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