Connecting with Bankruptcy Filers

A bankruptcy discussion board called BKforum allows people who have filed bankruptcy or are thinking about filing bankruptcy to discuss their experiences. By sharing experiences, BKforum members provide support and information to each other. The forum contains a lot of useful information although some of it is less than accurate. Therefore, anyone contemplating bankruptcy should seek advice from a competent bankruptcy attorney.

The support provided by forum members can especially be useful to people who are concerned about the effect of a bankruptcy on their credit, employment, etc. I have a lot of clients who are worried about improving their credit or obtaining or maintaining a job after filing bankruptcy. It is possible to rebuild credit scores and it’s against the law for an employer to discriminate against someone for filing bankruptcy. However, even after I explain this to some clients, they are still worried. Communicating with people who have completed the bankruptcy process can ease the fear and make the decision to file bankruptcy bearable.

When is Chapter 13 the Better Option?

Some people want to repay their debt, but they are unable to afford the regular monthly payments. Others are behind on mortgage payments due to a temporary reduction in income. Some people have debt that is not dischargeable in a Chapter 7 bankruptcy or their income is too high. In each of the above situations, a Chapter 13 bankruptcy may be a good option.

A Chapter 13 bankruptcy is a repayment plan that is based on a person’s income and expenses. If a person can only afford $200 per month based on living expenses, then that’s how much he or she will pay to the bankruptcy trustee. Then, the trustee will divide the money up among the creditors. Like other forms of bankruptcy, creditors are not allowed to garnish wages, foreclose on property or take other steps to collect the debt. The repayment plan lasts for 3-5 years, then the remaining balance on dischargeable debt is cancelled.

A Chapter 13 can help someone become current on a mortgage payments. The Chapter 13 doesn’t decrease the mortgage payment, so it’s best for someone who missed mortgage payments due to a temporary financial setback. However, a Chapter 13 can be used to cancel a second home loan if the home is worth less than the amount owed on the first mortgage. The process is called stripping the lien and can potentially save a debtor a lot of money.

Filing Bankruptcy Without an Attorney

In an effort to save money, some people look into filing bankruptcy without an attorney. They either prepare the bankruptcy documents themselves or hire a bankruptcy petition preparer. However, bankruptcy is a complicated area of law and filing without the advice of an attorney is very risky.

Non-attorney bankruptcy petition preparers are not allowed to give any legal advice. Doing so is engaging in the unauthorized practice of law. In Michigan, some preparers got into trouble with the bankruptcy court for providing legal advice to their clients. To make matters worse, they often incorrectly prepared bankruptcy paperwork resulting in many problems and revisions for their clients.

Failing to have correct information on a bankruptcy petition can result in the case being dismissed or a loss of assets. Filing bankruptcy involves more than just paperwork. An experienced attorney is better at predicting potential problems with a case. For example, are there any creditors who are likely to file a Complaint for fraud? Additionally, not everyone who wants to file bankruptcy should do so and an attorney can provide legal advice about the different options.

Problems increase when a Chapter 13 bankruptcy is filed without an attorney. In the Detroit area, there is a specific format for a Chapter 13 Plan. It’s important for creditors to be properly classified and for the payment amount to be properly calculated. People who file a Chapter 13 bankruptcy without an attorney end up with a dismissed case unless they hire an attorney at some point during the process.