Table of Contents
- #1. Do you qualify for bankruptcy?
- #2. Which type of bankruptcy might be best for you?
- #3. How will bankruptcy impact your property?
- #4. How will bankruptcy affect your credit?
- #5. How will the process work?
- #6. Is there a sense of urgency about filing bankruptcy?
- #7. What should you do next?
- Helpful Information for Your Bankruptcy Consultation
- Learn about the Bankruptcy Attorney
Your initial consultation with a bankruptcy attorney can be a source of valuable information to help you make good decisions for your family’s financial future. Many people leave that consultation breathing easier. Unfortunately, many people don’t get the full value of that consultation because they aren’t prepared to provide key information or don’t know what questions to ask.
At Borowitz & Clark, we think of the initial consultation as a strategy session. The more we know about your situation, the better we’ll be able to advise you. And, we’re looking to provide information that helps you make the right decisions moving forward–even if that turns out not to be filing bankruptcy at all.
Here are some key questions you should be looking to answer when you consult a bankruptcy attorney, and what the attorney will need to answer those questions.
#1. Do you qualify for bankruptcy?
Both Chapter 7 bankruptcy and Chapter 13 bankruptcy have specific eligibility requirements, but they are very different. For example, having too much income could disqualify you from Chapter 7 bankruptcy. On the other hand, having too little income could be an obstacle to Chapter 13.
To determine whether you are likely eligible for Chapter 7 or will be able to craft a Chapter 13 plan the court will confirm, a bankruptcy attorney will need to know:
- Your income, and whether you are anticipating and changes in income in the near future
- The type of debt you are looking to resolve (such as medical bills, credit card debt, auto loans, and mortgage debt)
- A close estimate of the total amount of debt, with secured debt such as mortgage loans separated from unsecured debt like credit cards, payday loans and utility bills
- Whether you have certain types of assets
#2. Which type of bankruptcy might be best for you?
Many people qualify for both Chapter 7 and Chapter 13 bankruptcy. Determining which is best for your circumstances will depend on your goals and priorities, as well as the type of debt you’re carrying.
The information above will help to answer this question, but your bankruptcy attorney will also need to understand what’s most important to you. For example, are you consulting an attorney primarily because you want to avoid mortgage foreclosure, auto repossession, or some other crisis? Or, is your biggest problem that you’ve been making minimum payments on high-interest credit cards for years and can’t seem to make any significant progress toward paying off those debts?
The bankruptcy attorney will ask questions to gather this information, but it’s helpful for you to think through your priorities in advance so you can tell your attorney what you hope to achieve.
#3. How will bankruptcy impact your property?
Most people who file for bankruptcy don’t lose any property. But, that’s partly because bankruptcy attorneys assess whether any property may be at risk in advance, and people factor that in when deciding whether to file bankruptcy and which Chapter is the best option for them.
Your attorney will gather this information in detail if you decide to move forward with bankruptcy. But, you’ll get a better assessment if you are prepared to provide information such as:
- The approximate value of your home and outstanding mortgage balance
- The approximate value of your car(s) and outstanding loan balance(s)
- The amount you have in any checking accounts, savings accounts, brokerage accounts, certificates of deposit and similar
- Any luxury items you may own, such as a boat
- The value of any real property you own aside from your primary residence, and any outstanding debt on that property
- Any other assets of significant value you may have
#4. How will bankruptcy affect your credit?
Bankruptcy stays on your credit report for either 7 or 10 years, depending on the type of bankruptcy you file. Even so, many people see their credit scores increase significantly right after bankruptcy. Managed correctly, bankruptcy can provide a foundation for a more solid financial future, including a higher credit score and access to better and less expensive credit. But, there are some limits, particularly in the first few years after bankruptcy.
If you’re looking to clear your debt so you can purchase a home or make another significant financial move that requires credit approval, ask the attorney about the typical timeline for that type of purchase after bankruptcy, and any advantages or disadvantages associated with filing bankruptcy.
#5. How will the process work?
Any time you’re working with an attorney, it’s important to know what to expect. For example, you’ll want to know how long the bankruptcy process will take, and what will be required of you.
You will also want to ask who will be your primary point of contact in the firm, what the best means of communicating with the attorney is, and what kind of response time you can expect if you have questions or concerns.
#6. Is there a sense of urgency about filing bankruptcy?
If you’ve been drowning in debt for a while, you likely have a sense of urgency in the sense that you can hardly wait to get out from under the stress. But, this question is more technical.
In some cases, bankruptcy can be delayed–in fact, in a very small percentage of cases, it’s better to wait a while to file. But, in other cases, something like a pending foreclosure means that delay could cost you more than additional stress. Make sure you understand how important the timeline is in your situation.
#7. What should you do next?
You may decide right away that you want to proceed with bankruptcy. But, your case won’t be filed instantly. So, it’s important to make sure you understand what you should do between the initial consultation and the time your bankruptcy petition is filed. For instance:
- What will the attorney need from you to take the next step?
- How soon will the attorney need payment, documentation, and whatever else is requested in order to meet your goal for filing?
- What bills should you pay until the filing date, and which can you abandon?
Helpful Information for Your Bankruptcy Consultation
This list is long, and not every item will apply to everyone considering bankruptcy. We also know that not everyone has all of this information readily available. But, it’s important to keep in mind that the more information you provide, the better able we’ll be to provide personalized insight into your situation and make the most informed recommendations.
Information that’ll help us put together an informed plan for you includes:
- Identification (such as your driver’s license)
- Recent pay stubs
- Bank statements
- Retirement account statements
- Most recent statements of any other financial accounts, such as brokerage accounts
- Most recent tax returns
- A list of creditors with outstanding balances
- Current bills (mortgage, credit card, auto loan, etc)
- Collection letters
- Lawsuits, foreclosure notices, and other debt-related legal documents
- A list of current living expenses, including rent or mortgage, utilities, groceries, insurance, medical expenses, child care, clothing, property taxes, and other regular costs–even pet care
If you’re unsure whether an item should be included, bring it along, or have it ready. Better too much information than not enough.
Learn about the Bankruptcy Attorney
Your initial consultation is also a good opportunity to get a feel for the attorney and the law firm. Some bankruptcy firms use the “consultation” as a sales session instead of a strategy session. You’ll learn a lot about the firm and the attorney by whether you’re getting valuable information during the consultation or just a hard sell of their services.
You’ll also want to pay attention to how knowledgeable the attorney is, ask about their experience with similar cases, and take note of whether they listen to and are responsive to your concerns.
If you’re curious about what a virtual consultation looks like with our firm, check out the video below for an example of what you might expect:
To schedule a free consultation with one of the experienced Los Angeles bankruptcy attorneys at Borowitz & Clark, call 877-439-9717 or fill out the contact form on this page.