The Difference A Good Lawyer Can Make

Understanding And Handling The Challenges Of Filing For Bankruptcy

To handle the bankruptcy process well, you need to understand the challenges that are inherent to it. A bankruptcy lawyer will want you to prepare for these five potential challenges.

Choosing a Bankruptcy Type

First, you have to determine which type of bankruptcy is appropriate for you. If you file for the wrong type of bankruptcy, the court will keep your filing fee and make you start over from scratch.

The three major forms of bankruptcy are Chapter 7, 11, and 13. Chapter 7 involves liquidating non-exempt assets to discharge debts for businesses and individuals. Chapter 11 is a restructuring plan that mostly appeals to businesses. Chapter 13 is focused on restructuring personal debts.

Other chapters exist. Chapter 12 exists largely to help family farms and fishing businesses. Chapter 15 involves the U.S. assets of a foreign entity or individual filing for protection in the home country. There are also limited scenarios where individuals might file for Chapter 11. You want the opinion of a bankruptcy attorney before you file.


You might have decided that a particular form of bankruptcy is right for you. Now you need to determine if bankruptcy law considers you eligible.

Chapter 7 filers are usually automatically eligible if they make less than their state's median income. Determining eligibility for restructuring can be more complex. You have to show the court that you have enough income to pay based on a proposed plan. However, you also have to show that you're experiencing enough economic hardship that a plan is necessary. Proposing a restructuring plan is complicated so have a bankruptcy lawyer assist you.

Credit Counseling

People who file for bankruptcy must undergo credit counseling. You need to find an accredited institution for the classes. Fortunately, a bankruptcy attorney can usually point you to several options. Also, you need to document that you completed the classes and include evidence with your filing.


Depending on the circumstances, the judge may order you to appear. Court hearings are most common when creditors have objections. However, you should assume you'll need to appear in court even if your case appears to be on an easy track. A bankruptcy lawyer can help you handle questions from the judge or the creditors' counsel.

Fulfilling the Terms

Assuming the court grants your petition, you still have to fulfill the terms of the bankruptcy. This may include turning over assets for a liquidation sale. If you entered a restructuring agreement, you will have to make payments.