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Bankruptcy law is complicated and difficult to safely navigate without help from a lawyer. There are multiple types of bankruptcy available, each with different advantages and disadvantages. Each bankruptcy type is referred to as a chapter. As an individual, the ones which apply you to are primarily Chapter 7 and Chapter 13, though in some cases Chapter 11 may also be relevant as well. The different bankruptcy types determine whether your debt is eliminated outright or if you are required to set up a repayment plan. It also determines what you are allowed to keep versus what you must liquidate as well as how big of a hit your credit score takes.
If you are thinking about declaring bankruptcy, it may seem impossible to spend even more money to hire an attorney. While hiring a lawyer is normally pricey, there are many bankruptcy attorneys willing to work pro bono, which means their services are available either free of charge or at a severely reduced rate.
Why do Bankruptcy Attorneys Work for Free?
At first, a pro bono lawyer might seem too good to be true. There are multiple benefits for lawyers to work for free. The American Bar Association recommends all lawyers take a certain number of pro bono cases each year. Many states also have a set number of cases a lawyer or law firm is required to take pro bono. Lawyers are encouraged to take pro bono cases because it is the right thing to do, and it helps clients who are normally unable to afford legal assistance. This makes clients feel safer and more comfortable asking for legal help.
There are some practical benefits as well. Working a case pro bono is a chance for lawyers to get positive PR. It also gives them a chance to practice in the courtroom. Many lawyers who are looking to get hired by a firm work pro bono cases with the hope of being noticed and recruited.
What Does a Bankruptcy Attorney Do?
Bankruptcy lawyers have several responsibilities. The two most important roles of a bankruptcy attorney are protecting your remaining assets from debt collectors and either easing or outright removing your debt. The first thing a bankruptcy attorney will ask for is any documents relating to your debt. Typically, the initial consultation lasts between 30 and 60 minutes. The initial consultation is not a deep dive into your finances. During this period, you briefly go over your debt, what payment plans you currently have set up and your general financial situation.
Your attorney goes over this information to determine the best possible case for your bankruptcy. Attorneys normally push for Chapter 7 whenever it is possible. The main difference between chapter 7 and 11 bankruptcy relates to the repayment plans. With Chapter 7, you are not required to set up a payment plan. However, you must liquidate nonessential assets and use those remaining funds to pay back creditors. With Chapter 13, you do not liquidate any assets, but you must pay off your remaining debts within a three to five-year period.
If you do end up with a repayment plan, your attorney will work with your creditors to make a reasonable repayment plan. Your attorney can end any wage garnishments currently placed on your debts. He or she may also be able to renegotiate how much you owe.
In addition to walking you through the types of bankruptcy, your lawyer also represents you whenever you must appear in court. Your lawyer also completes paperwork on your behalf. This is important for bankruptcy cases, which often involve more legal documents than other cases.
When to Hire a Bankruptcy Attorney
Filing for bankruptcy is recommended as a last-ditch effort. There are a few warning signs to consider if you are debating whether to declare bankruptcy. One warning sign is if you have only been able to make the minimum payments on your debt for the last several months, or you are maxing out credit cards and taking out more debt to pay off your other loans. Another warning sign is if collection agencies are calling you, or creditors are threatening to sue you over your debt. If you are not eligible for debt management or other relief programs, bankruptcy may be your only option.
How to Hire a Pro Bono Bankruptcy Attorney
Finding a pro bono bankruptcy attorney is harder than finding a traditional attorney. The American Bankruptcy Institute has an online tool you can use to search specifically for pro bono attorneys. Otherwise, your best bet is to look online or ask friends and family members for recommended attorneys. You can also check with the American Bar Association and Legal Services Corporation for attorneys operating in your state.
You are recommended to find several potential lawyers before making a decision. Be upfront about your needs, and make it clear you do not have the money to pay for an attorney. Be prepared to present financial information, to show your attorney why you need pro bono representation.
When you are speaking with the lawyer, ask which chapter you qualify for. Do not be afraid to ask specific questions, including what assets you will be able to keep and which you will have to give up. You should also ask whether the lawyer will represent you personally, or if the firm will appoint a paralegal or other assistant to handle the bulk of the case. You can also ask about previous cases to determine the overall experience of your lawyer. If you are looking online, be sure the lawyer is actually accredited, and see if you can find any reviews discussing his or her overall quality.