Bankruptcy attorneys are not only helpful in actually filing for bankruptcy protection, but may be useful in actually avoiding filing a petition for bankruptcy. Although most people think bankruptcy lawyers make more money actually filing, the truth is the amount of fees a bankruptcy lawyer can charge is capped by most states. Most states require a bankruptcy petitioner to attend credit counseling prior to filing their petition. Bankruptcy attorneys can help you determine which course might be best for your particular situation.

Bankruptcy itself is the legal status for an individual or corporate entity that is declared an impairment or inability to pay their creditors. Creditors may file a petition against the debtor forcing an involuntary bankruptcy, or the debtor may file for voluntary bankruptcy protection themselves. In either case, bankruptcy law can be rather involved and requires a bankruptcy attorney with experience.

The purpose of bankruptcy is to give the debtor either an opportunity to restructure the debt owed or to eliminate a majority of the debt entirely. Some debt is exempt from bankruptcy protection, most federal student loans and taxes are exempt. In some states homesteaded properties may also be exempt under certain conditions. Your bankruptcy lawyer will be familiar with all of the items that are exempt within your state.

Types of Bankruptcies

Most bankruptcy attorneys are well versed in the different types of bankruptcy, and how they may relate to your case. The following is a brief example of the different types of protection currently available and where they may apply. These examples are not meant as legal advice; please contact a bankruptcy attorney in your local area. Many of the bankruptcy lawyers listed on our site offer free consultation services and would be glad to help.

Bankruptcies come in 2 different forms, restructuring and liquidation. The United States bankruptcy code under Title 11 offers six basic types of bankruptcy.

The first is Chapter 7 bankruptcy. Chapter 7 is one of the most common forms for both businesses and individuals. It is what is commonly known as a total liquidation where a trustee is appointed who then liquidates the nonexempt assets and distributes the funds to the creditors.

The second is Chapter 9 bankruptcy. under Title 11 of the bankruptcy code. This chapter is reserved for municipalities and is not available to the general public.

The third is Chapter 11 bankruptcy. Chapter 11 is considered a restructuring type of bankruptcy. This is mainly used by corporations and individuals with significant assets.

The fourth is Chapter 12 bankruptcy. Chapter 12 is considered as a restructuring for family farmers and fishermen.

The fifth is Chapter 13 bankruptcy. Chapter 13 is another common form of bankruptcy and is used by wage earning individuals who wish to restructure their existing debt. A payment plan is set up between 36 and 60 months, and allows the petitioner to make regular monthly payments to help alleviate their debt.

The last chapter is Chapter 15. Chapter 15 under Title 11 of the United States bankruptcy law allows for creditors to cross national borders to seek relief.

Your bankruptcy lawyer is well-versed in all of these chapters and will be able to help direct you.