If you are an individual or business entity that can no longer pay your debts or requires debt restructuring or a liquidation framework, then your best option for legal recourse is filing for bankruptcy. In 2020, United States federal courts recorded a total of 544,463 bankruptcy filings consisting of 21,655 business filings and 522,808 non-business filings. Although these numbers represent an overall decrease of 29.7% in bankruptcy filing when compared to the previous year's numbers, Chapter 11 filings rose by more than 18%. While it may seem like a cheaper option to file for bankruptcy on your own, doing this can end up being a costly and highly frustrating mistake. Bankruptcy proceedings involve a lot of research, paperwork, and extensive knowledge of the bankruptcy code as well as local court rules. Making a mistake in these types of cases can lead to major financial and legal consequences like losing your nonexempt assets and even having criminal charges for fraud filed against you.
As such, hiring a skilled and experienced bankruptcy attorney nearby that is skilled is important if you want to get the best possible outcome in your bankruptcy proceeding. This attorney can represent you at hearings and creditor meetings, handle all relevant paperwork, and offer helpful advice on your available options as well as their potential effects on your life.
To ensure that you get a positive result in your bankruptcy proceeding, you should always hire the most qualified bankruptcy attorney near you. Asking the following questions will help you with the task of choosing a competent attorney:
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Where Are You Licensed to Practice Bankruptcy Law in the State You Are?
Be certain that your bankruptcy attorney has the requisite license to practice and represent you before the court that will adjudicate your case. The U.S court system is made up of state courts and federal courts, and each of these courts has different procedures. All bankruptcy cases are federal cases, hence, to represent clients in any of the Bankruptcy Courts, an attorney must be admitted to practice in the district court of the jurisdiction where the bankruptcy case is filed. Depending on the judicial district, an attorney may be required to already have been licensed to practice law either by the state's bar association or that of any other state. For example, in jurisdictions like the Southern District Court of Texas, attorneys licensed by any bar association in the country can be admitted for practice, while districts like the Northern District Court of California and the Western District of Washington admit only attorneys that are members of their respective state bar associations.
Note that an attorney must pass an admission test provided by the Law School Admission Council, attend an accredited law school, and then sit for the bar examination before being licensed by any state. Additional eligibility requirements may be provided by the state bar admission agency. To verify whether any bankruptcy law attorney near you possesses the requisite license, interested persons can contact the relevant court via this online directory or utilize online directories operated by the American Bar Association.
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What Kind of Bankruptcy Law Work Do You Handle?
The US Bankruptcy Code offers different types of bankruptcy filings depending on the type of applicant and the purpose of the proceeding. The classifications of bankruptcy cases are based on particular chapters of the Bankruptcy Code. Any competent bankruptcy attorney near you will first examine your circumstances and explain your bankruptcy options. It is also necessary to make sure that your bankruptcy attorney is experienced in the particular type of case your circumstance relates to, which can be any of the following:
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Chapter 7: This chapter governs the process of asset liquidation where an individual or entity is unable to pay its debt. It is the most common form of bankruptcy representing as much as 63% of the bankruptcy filings in the last five years. Under this provision, a bankruptcy trustee is appointed to sell a debtor's nonexempt assets and distribute the proceeds to the creditors. After the available proceeds are disbursed, the outstanding debt is discharged or forgiven. A bankruptcy attorney should be able to advise you on the requirements for and consequences of filing under this provision.
- Chapter 9: this provision is a form of reorganization available only to municipalities e.g. counties, cities, and towns to resolve their debts.
- Chapter 11, 12, and 13: this provision covers rehabilitation or reorganization. This form of bankruptcy allows a person or business to retain their assets but restructure the debt obligations to make repayment easier. This allows companies to continue to operate while they adhere to a debt repayment plan.
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How Long Have You Been in Practice?
Navigating the bankruptcy process without legal expertise can be complicated due to the complex nature of bankruptcy laws and procedures. Experienced bankruptcy attorneys near you are knowledgeable in the applicable laws, court procedures, and deadlines. They also have existing interactions with the court officials that are involved in the bankruptcy filing process, thereby making communication with these people simpler for you. As such, you should make sure that your attorney of interest has proper knowledge and experience regarding the provision of the Bankruptcy Code you are to file under. The attorney should have handled similar cases and be familiar with the intricacies of the process. One way of ascertaining this is by inquiring into how long your bankruptcy attorney of interest has been qualified to practice law and how many of those years have been spent practicing bankruptcy law. Many law firms' websites have these details, but you can also query your attorney directly. Similarly, the American Bar Association's guidelines recommend that you seek a rundown of your attorney's case involvements to determine how much of this attorney's workload is similar to yours.
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Do You Charge Fixed or Hourly Fees?
Many bankruptcy lawyers charge a flat rate, which means you can pay a certain fee regardless of how much time the attorney spends handling your case. Other attorneys can bill you on an hourly basis, but this is uncommon, especially in consumer bankruptcy cases. Nevertheless, some attorneys may use a combination where you are charged flat fees for the bulk of the work and then hourly fees for additional litigation activities like defending against a discharge objection.
Some of the factors that affect attorney fees include the attorney's or law firm's reputation and experience, as well as the complexity of your case. For example, bankruptcy attorney fees for a Chapter 7 bankruptcy case range from $1,000 to $3,500 irrespective of the billing method. Full payment is usually required before filing a chapter 7 case because outstanding debts including attorney fees are typically discharged if the bankruptcy application is successful. Note that some judicial districts have a presumptive maximum attorney fee for certain bankruptcy cases. For example, in the San Francisco Division of the Northern District of California, the presumptively reasonable attorney fee in a Chapter 13 case is $3,500 for the basic case and between $500 to $1,500 for additional issues that complicate the case. Similarly, in the Eastern District of North Carolina, the presumptive fee is $3,700 plus extra fees for complications. However, attorneys may charge higher fees if they can show a legitimate reason for doing so.
Always confirm how you will be charged, how much these fees will be, and your attorney's preferred method of payment. Some attorneys favor conventional payment methods such as checks, while others embrace payment systems like credit and debit cards.
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Do You Charge for an Initial Consultation?
Bankruptcy attorneys typically either provide an initial consultation for free or charge a small fee for it, and so you should always get confirmation on this from your attorney. This initial consultation allows you to evaluate your prospective attorney while also getting some free or low-cost legal advice. Information shared to the attorney during this consultation is usually protected by attorney-client privilege, so you can communicate the relevant details of your case including your financial situation with nothing to worry about. This will enable any bankruptcy attorney near you to advise you on the various bankruptcy filing options available to you. After the consultation, you can then decide whether or not to retain the services of the attorney.
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How Do You Keep Clients Informed about Their Case?
Bankruptcy attorneys are obliged under the American Bar Association's Model Rules of Professional Conduct to keep clients reasonably informed about the progression of their case. In many cases, bankruptcy applicants shun phone calls due to creditor harassment. Consequently, it may be difficult for bankruptcy attorneys and clients to maintain good communication throughout the bankruptcy process without proper planning. To avoid this, it is best to agree on a mode of communication with your bankruptcy attorney. Confirm if your communications will go straight to your attorney, or if they will have to go through an assistant or secretary first. You should also agree on a stipulated time for your attorney to brief you on the state of your case, whether there have been any significant developments or not. Depending on the circumstance of the case, this may be done on a regular, weekly, or monthly basis. Finally, you and your attorney should agree on what constitutes an emergency in the case and who you should contact in such circumstances.
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Who Will Actually Do the Work?
Be sure to confirm who exactly will be working on your case. In many bankruptcy law firms, paralegals assist bankruptcy attorneys in certain areas like document preparation, legal research, and legal support. However, paralegals are not licensed attorneys, hence they are not allowed to offer legal advice, accept or reject cases, or argue cases. Their functions must always be overseen by a licensed attorney. Because paralegal fees usually cost less than attorney fees, you should also confirm whether the deployment of a paralegal in your case would have any impact on your bill.
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Can You Provide References from Former Clients?
When on the lookout for a bankruptcy attorney near you, it is important to conduct some due diligence by assessing the attorney's credentials and case history. A good way of doing so is to ask the attorney to provide a list of references with cases that are similar to yours. Get in touch with these previous clients to get their feedback on the attorney. Alternatively, you can check out the firm's website to get testimonials from previous clients. You can also find recommendations from clients near you by doing a Google search for the attorney's name or using websites like Better Business Bureau and Google Check. Watching available footage of the attorney's court proceedings is also a good way of accessing the expertise and etiquette of your bankruptcy attorney.
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What Is Your Success Rate?
This question informs you of the chances of success of your bankruptcy application being handled by your attorney of interest. Success in a bankruptcy case varies based on the particular provision involved. For example, the success of a Chapter 7 bankruptcy is defined by the discharge of outstanding debts, while success under other bankruptcy provisions may involve the court's approval of the restructuring of a debt or the entity itself. Be sure to communicate your desired outcome and confirm that your attorney has achieved a similar outcome in like cases. Contacting the attorney's former clients is a good way to verify the attorney's expertise. Another option is to access the attorney's case history by contacting the courthouse where the bulk of the cases handled by the attorney were adjudicated. Note that the requirements and fees applicable to a court record search vary depending on the particular jurisdiction.
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When Should I Hire a Bankruptcy Attorney?
Although you can file under certain bankruptcy provisions by yourself in the US, hiring a competent bankruptcy attorney near you increases your chances of having a successful application. The complexities of bankruptcy paperwork, procedures, and collection agencies' tactics can be challenging to navigate without the help of an attorney. Hiring a competent attorney also prevents you from committing errors that can dent your application, delay it, or that can lead to criminal charges. As such, it is best to hire an attorney as early as possible, preferably before filing for bankruptcy. However, you can also hire one after you have initiated the process.
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What Are the Typical Qualifications Held by a Bankruptcy Attorney?
Attorneys are generally required to hold a bachelor's degree, complete studies in an approved law school, and pass the bar examination of a state they intend to practice in. Bankruptcy attorneys typically take courses like creditors' rights, income taxation, negotiations, and other bankruptcy-related courses in school. In addition to the typical qualifications, the American Board of Certification offers specialty certification in bankruptcy law. While it is not a compulsory requirement, being board-certified assures clients that the attorney has gained a high level of experience in a particular practice area.