Bankruptcy Overview: Things You Need To Know

Many people in the world today are facing bankruptcy. This is the legal status of a person or company that cannot repay debts he owes. The debtor initiates this status before a court can impose it. Such legal issues can be quite complicated and it would be wise to consult an attorney specializing and experienced in this area. You should also be aware of the components making up bankruptcy attorney fees.

Bankruptcy is among the debt relief solutions and is also a way of having a fresh financial beginning. People should however consult specialized attorneys before opting for this solution. The attorneys provide the necessary information to enable people make informed decisions. They assess the case and advise the client on which suit to file. They also file the required paperwork, present the case before a judge and also organize creditor meetings.

Such cases are sometimes complex based on the kind of case filed. There are mainly two types of cases under this category namely reorganization and liquidation. The attorneys may charge a varying fee depending on location, type of case and the firm. There are several components of the bankruptcy attorney fees and understanding them is important.

Basic filing fee is one of the components. These are fees you pay when your documents are filed with the court and they may differ from one state to another. These charges may also depend on the kind of case you have filed. Liquidation suits for instance could cost less than reorganization suits as they are more complicated.

The other is the attorney fee which is usually the largest component of these suits. The amount may vary from one firm to the other and the type of suit filed. A standard Chapter 7 case may be cheaper as it is more straightforward. Chapter 13 cases are more complex because they require lots of additional information and so they are more expensive.

There are also additional costs that you may be required to pay. They include payment for compulsory finance management and credit counseling classes offered after and even before the suit to assist you to manage your cash better in future. You could also be required to pay cash to facilitates meetings with your creditors.

These specialized attorneys help those who cannot pay their creditors to get a fresh financial start. This can be done in various ways including reorganization or liquidating assets to pay off debts. For this process to succeed it is important to choose experienced and specialized attorneys and also understand the components of bankruptcy attorney fees.

39 Replies to “Bankruptcy Overview: Things You Need To Know”

  1. Easy to read and relevant article on what bankruptcy is. It’s easy to understand and it lays out the terms nicely. The article gives different examples and paints the full picture of you. I didn’t know there was much difference between bankruptcy and liquidation- this was good to know. Would have been nice to know how much an attorney could charge for these cases, or at least what the average is. I guess this differs with office and case. I think this is an overall well-written article!

  2. A very good article on bankruptcy. A good reference point for someone envisaging bankruptcy who wants to be briefed on the legal details. I learned something new – lawyer fees for those interested in filing for bankruptcy. Thanks

  3. Thank you for your article is very clear and gives us a very clear picture of how important it is to seek advice in case of bankruptcy, the help of a good lawyer who knows the subject and can advise us about that unfortunate process. And so we can make use of this tool that the law gives us.

  4. Having been in a bankruptcy situation before I agree getting a good attorney is important. It gives you peace of mind knowing you are getting expert advice. Don’t carry that cross alone!

  5. For one, a lot of people are getting bankrupt due to their spending habits., while others are because of circumstances (e.g. divorce, health issues) beyond their control. However, the help of a professional is indeed needed to give the person a new start in life and should not be considered a shameful thing to do.

    1. So right Mariel. Many people are feel ashamed if they have to file for bankruptcy. But life happens and if bankruptcy is the ultimate way that you need to get a fresh financial start, then you gotta do whatcha gotta do. Thank you and everyone else for your comments!

  6. Bankruptcy can be a very painful experience for any entrepreneur. This article will somehow get one’s head together and seek help of the specialized attorneys to take relevant steps towards bouncing back.

  7. I have no idea that there were so many things regarding this subject. Bankruptcy is exactly the point we have to avoid, we have to be smart to manage money, but it is a good advice, always ask a professional for help.

  8. Having to incur the fees could be a set of new financial strain for firms and individuals that are truly broke. However, it’s a better option to declare bankruptcy rather than running away from reality and having to deal with worse consequences later.

  9. I am so glad I came across this article, I got to learn about all those fees. Filling for bankruptcy is a costly fix. Now I understand why some companies prefer to close their business and run because of the fees.

  10. It’s good to see that there are articles like this to educate people on matters such as bankruptcy. Shows the importance of actually getting an attorney who specializes in this.

  11. I always knew filling for bankruptcy was a process but I had no idea it entailed so much! I have to say, it seems a little overwhelming; no wonder there are lawyers who specialize in this!

  12. Filing for bankruptcy might seem like a quick but costly fix. I tend to imagine the best and cheaper fix is proper planning since one has the ability to avoid financial distress in the future

  13. Filing for bankruptcy can seem like an easy fix when you’re overwhelmed by your current debt load or can’t seem to put together a workable debt payoff plan. Keep in mind that the effects of filing for bankruptcy can last 10 years and creditors and employers will see the bankruptcy filing listed on your credit report.

    It can take years to repair your credit after bankruptcy so you need to do whatever you can to pay off that debt on your own. I pursued a debt relief program, and was able to settle my debt without going down the bankruptcy route.

  14. I am currently in a bad way financially (my school took my final disbursement of loans despite a verbal agreement to work out a payment plan for the remaining amount owing) and have been considering debt consolidation through something called MoneyMentors. Would this be the same as reorganizing?

    Also, I understand that paying for the education and expertise of a lawyer is going to usually be a pretty penny (unless you are just getting some pro bono advice and attempting to self-represent or self-litigate), but I have never understood why the courts feel the need to charge such hefty fees for the filing? Could you elucidate that issue?

    1. Hi Debesh, debt consolidation is usually considered a chapter 13 form of bankruptcy where you are simply consolidating all of your qualifying debts into one convenient monthly payment. Oftentimes in the process your interest will be lowered as well to help you pay off your debt with more ease. This process is a bit different that a chapter 7 where you are legally walking away from your debt because you have no ability to repay.

      As far as paying for count fees and such, unfortunately that’s just how it is. There are court charges, processes and work that needs to be done and lawyers have to get paid. But if you don’t have the money, then sometimes you can work with a public debt help organization in your community that may be able to help you with no upfront cost. Also, with a chapter 13, most lawyers or debt firms are not supposed to get paid until the debt is settled – at least that’s how it works in the U.S.

  15. It is good to know that we, as debtors, can initiate Bankruptcy as a way out during hard times. Then again this article seems to tell us we still have to give the last of what we can give to the lawyers. I suddenly have images of sharks around a dying whale.

  16. It’s fascinating that our legal system has the benevolence to provide bankruptcy as a solution for those crippled in debt to start over afresh, especially since everything else in the financial world, (like interest rates and inflation) always seem to be out to cruelly ruin the average man. After reading your concise but clear article, I have a new respect for attorneys who handle bankruptcy cases — they must have an impressive level of trust and altruism to take on cases for those who have no money at hand to pay them back!

  17. I believe that before filing for bankruptcy, debtors should investigate about it first. This will protect them from creditors during bankruptcy

  18. Thank you for the detailed blog explaining on bankruptcy.I just realized that bankruptcy is not actually running short of funds.However, i don’t think it’s the best solution unless you contact an attorney.

  19. since it became more crucial nowadays, everyone should learn how to manage you financial and if you’re already in verge bankruptcy or already bankrupt then you need to find resource that will help you get on your own and not only depend on attorney. we need the attorney but we also need our self to help our self.

  20. If I am the person/ company who got bankrupt and needed to undergo all those processes and fees including basic filing fee, attorney fee, etc., I would think I will be more bankrupt than I am. Now, I understand why most people choose to run away than file a bankruptcy report. Too much work!

  21. Filing for bankruptcy does seem like a viable solution for one seeking fresh financial beginning but a specialized attorney definitely helps a lot.

  22. Before reading this article I thought bankruptcy was just the fact of running out of money. I didn’t even know it was actually a “debt relief solution”, which is really interesting. However, I think one shouldn’t consider such solution without consulting a good attorney first.

  23. With all these complications, I think it’s really better to find an attorney. Though, it is good to know the important details.

  24. Filing for bankruptcy sounds more complicated to me than it really is. I wonder if filing and the process is similar to countries here in Asia…

  25. Thanks for the basic information, but do you have any idea how much the fees will go? I have been hearing a few of colleagues filing bankruptcy, but I’ve always wondered how they’re able to afford attorney fees if their broke.

    1. Hi Savannah, this is why you should get a consultation with different bankruptcy attorneys (usually initial consultation is always free) whereby they can give you more details on their process and fees. Also you will get a chance to see if you even feel comfortable and confident with them handling your case.

  26. There are too many fees involved before filing for bankruptcy. Someone who has financial problems should not be expected to pay for something like financial counseling considering he has spent a lot of money on a lawyer and filing fees.

  27. With economic advancement also comes the ever-growing financial difficulties. Let us not only become wise to consult an attorney when already faced with debt issues, but be wiser when we still have all our assets on good times. Great article!

    1. Yes a lot of people take for granted the good times, but those are the times to press ahead and not wait for disaster to strike.

  28. There are a number of occasions when debtors file for bankruptcy due to circumstances not of their own making, for example a depressed economy. This calls for understanding on the part of the creditors and the legal system. Creditor meetings should be promoted as a way to more amicable solutions.

  29. It’s important to note that bankruptcy creates a dire state of anxiety and emptiness(spiritual and financial) in either an individual or an organization that experiences it.What is alarming most of the time, is that most people or organizations like so,crumble, since they do not seek help from individuals trained in the field of law related to bankruptcy,who can ‘rescue’ them from what seems a bottomless pit.Most opt to ‘ runaway’ from reality.As stated ,through meetings, it is key to bring the creditor and debtor back to a level of understanding that was there before the bankruptcy.When positive things happen there is need to be together to celebrate.When negative things happen people should also come together to find lasting solutions to the misfortune which in this case is bankruptcy.Professionalism,understanding and dialogue are key when things go south.

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