Five Things You (And Your Attorney) Should Consider When You Are Thinking About Filing Bankruptcy

bankruptcy petitionThe important things that you should know about filing bankruptcy may not always be the questions that you think to ask.  These are the things your bankruptcy lawyer is thinking about when she advises you, and that are important for you to consider as well.

1.  There are generally two kinds of bankruptcy to consider.  A Chapter 7 bankruptcy is a liquidation; the bankruptcy court appoints a trustee to determine whether you have any assets that can be sold to pay your creditors.  A Chapter 13 bankruptcy is a payment plan, rather than a liquidation.  (There is also a Chapter 11 bankruptcy, which is a business organization, not usually an option for individuals.)  Which of these kinds of bankruptcy you qualify for, and which is in your best interest, is the most critical advice your attorney will give you. For some people, the choice is obvious; other times you may have to weigh the pros and cons of each type of filing.

2.  The second main focus is on your assets, and specifically whether you have any non-exempt equity in those assets.  You can have nice things and file bankruptcy, and even keep your nice things, depending on two things:  equity and exemptions.  Equity is the value of the property over and above any liens.  So, you might have a very nice house, that you want to keep, and that house may have little or no equity.  Your bankruptcy lawyer will approach this question the way a Chapter 7 trustee will.  First, she’ll consider the liquidation value of the property, i.e., what is the property going to net after a relatively quick sale, and after deducting the costs of the sale, like a real estate commission, or an auctioneer’s fee.  Then, what is going to have to be paid out of the proceeds of that sale, including mortgages or liens, as well as the portion of those proceeds that you are entitled to keep as exempt.  This calculation is critical to determining what is likely to happen in a Chapter 7 case, and what you will be required to pay in a Chapter 7 case.  Take a look at this post on Russ Demott’s blog for an explanation of how this process works with jewelry.

3.  Who you owe and how much will also be important to consider.  An obvious example is your mortgage.  If your mortgage payments are behind and your goal is to keep the house, that may indicate a Chapter 13 as your best option.  Similarly, if all you owe are credit card debts, that may indicate that a Chapter 7 is preferable, if you qualify.  But those are not the only considerations.  You will also want to consider the total amount that you owe, the terms of repayment, and how old the debts are.  Sometimes the obvious choice is not the right choice.

4.  Another point to consider is who you have been paying.  It may not be much of a issue if you’ve only been paying normal household bills, but if there are unusual payments, whether debt payments or gifts, it is something to be considered.  Such payments, especially to family members or other insiders may create issues that you will wish to consider. Other payments, such as those to a retirement account, may also make a difference.

5.  The most important thing to consider is your goal in filing the bankruptcy.  Whether you are trying to save a house from foreclosure, or are looking to make a fresh start, what you want to get out of the process should be the most important consideration.  Think about what you want, and discuss that with your attorney.  That will help you make the best choice for you

About

Däna Wilkinson (pronounced "Donna") is a bankruptcy lawyer practicing in Spartanburg, South Carolina and serving South Carolina's upstate region, including Greenville, Spartanburg, Gaffney, Union, Anderson, Easley and Pickens. She has been in practice for more years than she cares to count, but it’s more than 20 years. Däna has been a bankruptcy lawyer from the very beginning of her career as a lawyer.

Däna went to law school at the University of South Carolina, where she was Student Works Editor on the South Carolina Law Review and a member of the Order of Coif. She started doing bankruptcy work while still a student, working for a bankruptcy boutique firm whose members included a Chapter 7 panel trustee, and recognized experts in Chapter 11 reorganizations. She enjoyed the work from the beginning, and upon graduation took a job as a law clerk to the Honorable Rodney Bernard, bankruptcy judge for the Western District of Louisiana. Judge Bernard had spent a number of years on the bankruptcy bench, and was an excellent teacher and mentor. Upon Judge Bernard’s retirement, Däna stayed on for a time as clerk to the Honorable Donald W. Boe, until homesickness for South Carolina struck, and she returned to private practice in Charleston. Four years later, she received an offer to return to Columbia, where she practiced until 1997.

In 1997, planning to start a family, Däna decided to return home to the Upstate, and opened her own practice in Spartanburg in 1998. Over the years, Däna represented all sorts of parties in bankruptcy: business debtors in reorganization, individual debtors, creditors and creditors’ committees, and trustees. In establishing her own practice Däna decided to focus on consumer debtors, ordinary people who find themselves overwhelmed by debt. Her focus is on the individual needs of clients, and on crafting a solution to their unique financial needs. She is committed to helping clients make a fresh start, and preserving their dignity in the process.

Däna is the proud mother of a beautiful, talented and very active daughter, who is, as her mother says, “practically perfect.” She is also active in both church and community activities, all of which means that there is a fair chance that any given blog post was written while in the car pool line or while waiting for a hearing or a meeting to start.

Däna is also certified as a bankruptcy specialist by the South Carolina Supreme Court, which means that she has taken and passed a proficiency examination on bankruptcy law, devoted her practice to bankruptcy for a number of years, and continues to take classes on bankruptcy law and related issues.

Contact information for Däna Wilkinson:

Law Office of Däna Wilkinson
365-C East Blackstock Road
Spartanburg, SC 29301
(864) 574-7944
[email protected]
www.danawilkinsonlaw.com

Däna also blogs at www.bankruptcylawnetwork.com.


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