6 Steps to Hire a Bankruptcy Attorney

Editor’s Note: Changes made on August 20, 2020

If you are facing financial difficulties, the important thing is to realize you are not alone. A bankruptcy attorney can give you a clearer understanding of where you stand and what your options are. Taking control of the situation is often the first step to financial recovery. Here is how to find and hire the right bankruptcy attorney for your situation.

  1. Determine which type of bankruptcy is appropriate for your situation.

  2. Make a list of bankruptcy attorneys in your area.

  3. Narrow down that list by doing your research.

  4. Take advantage of an initial consultation.

  5. Make an informed final choice.

  6. Work as a team with your new attorney.

Determine which type of bankruptcy is appropriate for your situation.

There are two main types of bankruptcies (as well as several additional highly specialized types for specific business situations).

Chapter 7 is the most common kind of bankruptcy, and is also known as a “straight bankruptcy.”

A Chapter 7 bankruptcy lets an individual or business liquidate nonexempt assets to pay back creditors and eliminate debt. After filing Chapter 7 bankruptcy, collections actions against you will stop, a meeting with creditors will be scheduled, and once you meet the requirements of the bankruptcy, your unsecured debts will be wiped out.

To qualify for Chapter 7 bankruptcy, you cannot have completed a Chapter 7 bankruptcy in the past eight years, or a Chapter 13 bankruptcy in the past six years. You also have to pass the means test, which assesses your income, assets and expenses. To pass the means test, you must:

  • Determine whether your monthly income is below your state’s median income. In most cases, if your income falls below your state’s median, you have passed the test to file  Chapter 7 bankruptcy.
  • If your income is above your state’s median, you need to review your expenses for the previous six months, to determine what’s left toward paying down your debt. This process must be done accurately and thoroughly to avoid having your bankruptcy case thrown out. You may conduct the means test process yourself, if your bankruptcy situation is very simple and you are filing without legal representation. You may also begin the means test process prior to engaging an attorney, or you can do this once you have hired a bankruptcy attorney.

Chapter 13 bankruptcy is typically filed by individuals who have a regular income but need help dealing with overwhelming debt.  

With a Chapter 13 bankruptcy, a repayment plan is created. allows you to pay back some or all of what you owe creditors, over a period of time. While Chapter 13 bankruptcies are more difficult to file, they may allow you to keep your home and car, as you pay off your debts.

To qualify for Chapter 13 bankruptcy, you need to demonstrate that you are able to pay down debt, even if slowly and incrementally. To do so, you must:

  • Show that you are up to date on your income tax filings. To file Chapter 13, you will be asked to show proof of income tax filings for the previous four years. If you are not current in your tax filings, you may be able to delay your bankruptcy filing until you resolve your income taxes.
  • Disclose all of your income sources, to assess how much you can pay to creditors, and on what schedule. Income in this circumstance includes wages, Social Security benefits paid, unemployment insurance benefits, and rental income, among other sources of income.

Make a list of bankruptcy attorneys in your area.

Facing bankruptcy is overwhelming and stressful. Taking that first step is hard but also key to a long term solution. Psychologists recognize the anxiety that associates with “the first step” and suggests breaking it down into as many manageable pieces as possible. Our advice is to start by simply making a list of bankruptcy attorneys.

Your list doesn’t have to be very long. You may come across more attorneys later on. A handful to a dozen names is all it takes for now. This gets the ball rolling by giving you options and the confidence to take the next steps.

Narrow down that list by doing your research.

Now that you’re armed with a list of potential attorneys, you are ready to refine it. These two key research steps will help you make an educated decision:

1. Make sure the attorneys are licensed.

The easiest way to start narrowing down your list of attorneys is to make sure they are well qualified to practice law. The legal industry is a highly regulated field due to the nature of the work. Only those who have gone through the necessary training and education can call themselves a licensed attorney

First and foremost is to make sure the attorneys are licensed. Just because Uncle Benny gave you the name of his old college buddy who went to law school, doesn’t mean that he is licensed to practice law and give legal advice. Attorneys must pay annual dues and keep up with their continuing legal education to remain licensed. Also, certain serious infractions can result in an attorney’s suspension or even disbarment.

FightFraudAmerica.com is an excellent resource for checking the legal standing of an attorney. Under its “Attorney License Verification” section, it links you to the State Bar of each of the fifty states. You can then search via first and last name. The results indicate whether the potential attorney has an active license and whether or not there have been any disciplinary actions in the past.

2. Make sure they are experienced in bankruptcy law.

Much like medicine, the legal industry is occupied by general practitioners and specialists. But the distinctions are less clear. A criminal prosecutor most likely won’t handle your civil case. Likewise, a personal injury attorney may not be experienced in the intricacies of bankruptcy law.

Make sure the attorneys on your list actually practice bankruptcy law. The easiest way to check is to visit his or her firm’s webpage. There, they will almost always list their practice areas, educational background, bar admissions, and relevant experience. Alternatively, you can search their names on LinkedIn for a profile.

Take advantage of an initial consultation

Once you’ve narrowed down your list, it is important to meet the attorneys before committing to one. Financial matters can be very personal and it is important to be comfortable with who you are working with. 

Take advantage of their free initial consultations. These are usually 30 minutes long. This will give you and the attorney a chance to meet face-to-face and have a better understanding of the situation.

1. Set up the appointment.

The fastest way to set up a consultation would be by phone. Alternatively, a firm’s website may have a “Contact Us” form that you can fill out for them to get back to you later. Either way, ask the firm what specific documents they would like you to bring along. 

If you are more comfortable speaking in another language, also ask if they can provide you with an interpreter during the consultation. Legal terms and concepts are difficult to understand to say the least and communication between attorney and client is of utmost importance.

2. Prepare for the initial consultation.

Being prepared will help you take advantage of this initial consultation. Here is a list of things to consider before a consultation:

  • Organize your documents. Having everything well organized and clearly labeled will save you from rummaging through a stack of papers nervously at their office.
  • Have your basic financial information ready. You will likely have to fill out a form in the waiting room asking you specific financial questions related to your assets, loans, mortgages, spousal support obligations, and etc.
  • Prepare a short list of questions to ask the attorney. See the section below for more detail.
  • Be mentally prepared to answer questions fully and candidly. Omitting facts or lying to your attorney may harm your case in ways you cannot imagine. Don’t risk it.
  • Be prepared to discuss costs. One of the primary goals of this consultation is to know how much the attorney’s fees will cost.
  • Bring a pen and a notepad. Leave your tablet and laptop at home. Bring paper and writing utensils to record what you’ve learned.

3. Ask the right questions.

Remember that the consultation is for you to decide whether or not to hire the attorney. The following is a list of questions you may want to ask during the meeting. Remember to write down the answers. 

Experience Related

  • Will you be handling my case directly?
  • Are most of your bankruptcy clients individuals or businesses?
  • What is your experience with bankruptcy cases similar to mine?
  • Is there anyone else in your firm who handle bankruptcy cases and will they be involved?

Case Related

  • Should I even be filing for bankruptcy?
  • What are my alternatives to filing for bankruptcy?
  • Are there any red flags in my case?
  • How long will the process take?
  • What are some of the most important deadlines?
  • What is your overall game plan for my case?

Service Related

  • What is the best way to reach you?
  • Who will accompany me to court?
  • How will you keep me updated on the progress?

Cost Related

  • How do you calculate your fees and what do they include?
  • Is there a retainer and is it refundable?
  • Are your fees negotiable?
  • Do you offer payment plans?

4. Write down what you’ve learned.

Recap what you have learned after the consultation. A lot of information will have come your way in a short period of time, so take the time afterward to process it. Write down what you’ve learned and use the notes to refresh your memory later on.

Make an informed final choice.

After you’ve met with a few attorneys, it’s time to make a choice. We’ve listed three factors for you to consider below.

1. How well did the attorney communicate with you?

An attorney is your legal representative so it is crucial that both parties understand each other’s priorities. Did the attorney listen to you carefully and give you the proper attention? Did the attorney explain things clearly in a language you can follow? Was he or she courteous and polite or was he rude and unresponsive? These questions dictate how service oriented the attorney is towards his or her clients.

2. Do you trust that the attorney can achieve your goals?

Hiring a stranger, in any situation, involves a leap of faith. But having done your research online and having met with the attorney, you should have some sense of whether or not the attorney knows what he or she is doing. Does he or she have experience in bankruptcy law? Is he or she detailed oriented or clumsy? Did he or she graduate from Harvard or from an unaccredited college? Don’t be distracted by a sharply pressed suit and a firm handshake. Decide objectively. 

3. Are you comfortable with the attorney’s fees?

Chapter 7 bankruptcies have a federal filing fee of $335 and average attorneys fees from $1,200 to $2,500. Chapter 13 bankruptcies have a federal filing fee of $310 and average attorneys fees from $2,000 to $3,000. These ranges should include everything required to complete your case, provided that there aren’t any rare or unforeseen circumstances requiring extra attention and time.

You have the right to have the fees laid out in advance in a written contract. The contract should break down what the attorney’s fee includes.

Top rated lawyers may charge a premium, but they might have junior attorneys work on your case. Conversely, more affordable attorneys may have a higher volume of active cases so they may not have as much time to focus on yours. While the financial crisis that is prompting your bankruptcy filing may also tempt you to hire the cheapest bankruptcy attorney you can find, hiring a lawyer on price alone is not a good idea. Cost should be a consideration, but shouldn’t be your only determining factor.

Work as a team with your new attorney.

After you’ve hired your new attorney, you’ve now got an expert on your side, a new recruit to your team, a professional in your corner. Your attorney is a valuable resource so working together efficiently will not only save time and money, but it may improve your chances of a favorable outcome. Here are 5 useful tips on working with your lawyer:

1. Keep your lawyer informed and up to date. Attorneys can only work with what is available to them. Provide your attorney with full disclosure and give your attorney all the necessary documents and materials. Promptly update your attorney on changes in deadlines, court dates, or other circumstances.

2. Be available and easy to reach. Your attorney should be responsive to your questions and requests, but the same should apply to the client. Sometimes, attorneys need specific authorization from the client to carry out an action and your delay in responding to his email or voicemail can become costly.

3. Be reasonable about what your attorney can and cannot do. Attorneys must work within the boundary of the law and the ethical rules.9 Also, realize that unless you’ve paid a lot of money to hire your attorney exclusively, he or she will have other clients and demands.

4. Ask for copies and keep your own records. Keep copies of all papers you receive from anyone involved in your case. These include court documents, letters from your attorney, documents from creditors, and etc. This is a level of protection for yourself in case your relationship with the attorney goes wrong.

5. Ask for clarifications and follow their instructions. While attorneys are known for their legal jargon, most really try to be clear. Always ask for clarification if there is something you don’t understand and if given instructions, make sure you follow them accurately and with detail. You are paying for their advice.

Ready to speak to a lawyer? Here is our list of the best bankruptcy attorneys near you.

 Disclaimer

The materials provided in this article are for informational purposes only and not for the purpose of providing legal advice. Use of and access to this article or any of the links contained in the article do not create an attorney-client relationship between the author and the user or browser. You should contact your attorney to obtain advice with respect to any particular issue or problem.

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