14 Nov Meeting With Your Bankruptcy Attorney For the First Time: 4 Lessons to Keep in Mind
The clients who first walk into our offices to talk about bankruptcy come from all walks of life. They are young, old, male, female, professionals, parents, married, divorced; you name it.
And almost all of them are worried, nervous, scared, or embarrassed when they sit down to talk about their problems.
Though these feelings are natural, you shouldn’t have to feel uncomfortable when you first talk to your bankruptcy lawyer If you’ve never talked to a bankruptcy lawyer before, or are preparing for your first meeting, here are 4 lessons that can help make that meeting much easier for you.
Lesson 1: Bankruptcy Does Not Mean You Have Failed
One of the most difficult steps in the bankruptcy process is deciding to take that first step and call a lawyer. People take pride in their ability to fend for themselves, be responsible, and live up to their obligations. When you make that call, if can feel like you’re admitting that you’ve failed. It can feels like you’re giving up. But feeling like you’ve failed and being a failure are not the same thing.
Filing for bankruptcy is a responsible, and difficult act to take. Hiding and hoping everything goes away is the irresponsible thing. Accepting the reality of your circumstances and doing what is in your best personal and financial interests is what bankruptcy is all about.
Bankruptcy is your way of taking responsibility. Bankruptcy is the way you protect yourself. Calling a bankruptcy lawyer doesn’t mean you’ve failed. It means you’re a person who is capable of objectively knowing when you’ve suffered a loss, and are someone who is willing to take the hard steps to do the right thing.
Lesson 2: Don’t Be Afraid
Too many people associate the word “bankrupt” with “destitute.” They think that if they file for bankruptcy they’ll be left homeless, on the street, and with nothing to their name but the clothes on their backs.
Relax. Filing for bankruptcy is not even close to being that bad. What you’ve heard about bankruptcy, or what you think you know about it, is often very wrong.
To start, bankruptcy is an action, not a financial state. Even though people often use the word “bankrupt” to describe a situation where they cannot pay their bills, that isn’t what bankruptcy is.
Bankruptcy is a legal status you obtain when you ask for the bankruptcy court’s assistance. It’s a statement about your legal position, not a statement about your finances.
Once you file for bankruptcy you are immediately protected from your creditors. Those creditors are legally, and immediately, prevented from pursuing you for your unpaid debts. If your creditors violate these protections they face serious consequences.
Yes, bankruptcy will hurt your credit and harm your ability to get a loan. Yes, you might have to give up some of your possessions. Yes, it can be embarrassing.
But bankruptcy is also helpful. For those who are struggling financially, bankruptcy can feel like a lifesaver in a stormy sea.
Lesson 3: You Won’t Lose Everything
Again, bankruptcy does not mean destitution. If you file for bankruptcy, you won’t lose all your possessions.
For example, when you file for Chapter 7 personal bankruptcy, a bankruptcy trustee appointed by the bankruptcy court assumes responsibility over your property. The trustee has the authority to sell some of your property to pay back your creditors. Some. Not all. Some property, known as exempt property, cannot be sold in bankruptcy, and most people can exempt all of their property.
What counts as exempt property? Your bankruptcy attorney will give you a more detailed explanation, but it includes:
- Equity in your personal residence to a value of up $35,000, or up to $60,000 if you are 65 or older.
- A personal vehicle of a value of up to $3,500.
- Personal clothing, furnishings, and household goods of up to $5,000, or sometimes more.
- College savings funds of up to $25,000.
- Prescription health care devices.
- Professional tools or equipment of up to $2,000.
- Unpaid wages within the last 60 days.
- Retirement and pension benefits.
- Public benefits.
- And more.
Lesson 4: Be Prepared
Bankruptcy affords you broad protections from your creditors, but you will have to be prepared to be open about your finances. Before you come in to your first meeting, you will want to be prepared to discuss some specific information, such as:
- Your contact and personal information.
- Asset information.
- Debt information.
- Income and expenses.
- Details about any obligations you have, such as child support or marital support payments you’re making.
Your lawyer will also give you a list of information you need to assemble so you can file for bankruptcy. You’ll want to make sure you’re ready to do your homework, assemble the needed information, and get it to your lawyer as soon as you can.
Finally, it’s important to bring a list of questions. As you prepare for your meeting, write down any questions or concerns that occur to you. Bring that list with you to your first meeting and ask your lawyer about the questions you have.
Always ask questions when you don’t understand something. Don’t worry if you think your question is dumb. It isn’t. Bankruptcy is very complicated, and even the most experienced attorney is always learning something new.
In short, you need to come to your first meeting with your bankruptcy attorney as prepared as you can be. Allowing yourself to relax and understand that bankruptcy is a new star