There are two distinct kinds of bankruptcy lawyers: commercial bankruptcy lawyers who can help you with bankruptcy laws in general, and debt negotiation lawyers who deal exclusively with bankruptcy law relating to debt repayment. In most states, all bankruptcy lawyers must be licensed by the state bar. This is so that you can be sure the lawyer has been sufficiently trained and passed the bar exam, which is a test of his knowledge and technical skills. Besides, all bankruptcy lawyers must be bound by the Board of Bankruptcy Rules, including any mandatory continuing education requirements.
A good Bankruptcy Attorney is willing to explain the process to you clearly. And he should also understand all of the applicable bankruptcy laws so that he can properly advise you on your options, liabilities, and what discharge would be appropriate for you and your family. If the debt is likely to be discharged because of a minimal amount of debt – $500 – then your attorney may not even require you to pay anything further in filing fees. (If your debt is above this level, your bankruptcy attorney may require you to pay filing fees, but only if you opt for this kind of discharge.) For example, if you have an adjustable-rate mortgage loan that is at least ten years old, but that rate has been reduced to six percent interest, you probably will not have to pay any additional fees for the service of your bankruptcy attorney.
But if you have a balloon payment of a thousand dollars in outstanding debt, your bankruptcy attorney might tell you to seek discharge for the balance. The bankruptcy attorney might also advise you to seek the liquidation of some of your assets to pay off your creditors. Another bankruptcy attorney might point out to you that it may not make sense to file for bankruptcy if your creditors are not going to agree to accept a discharge. (The bankruptcy attorney for your other clients, if different from this one, might have a different take on this issue.) It may seem obvious, but there are some cases where it makes sense to seek discharge of a part of your debt.
Many bankruptcy attorneys, including those who represent homeowners in Chapter 13, will advise a homeowner who has fallen behind on payments to consider a short sale. There is, however, a difference between a short sale and foreclosure, which should be discussed in great detail between your attorneys and lenders. Foreclosure is often a much greater hardship on a homeowner than a short sale would be.
There is one other issue to consider before your bankruptcy attorney can advise you on whether a short sale is right for your circumstances. If your lender sells your house, it must give you three years’ notice. If you are not living in the home, there are no notices required by law. Therefore, during the period of the selling process, you cannot be evicted. This means that the house will be on the market while you are waiting for the bank to settle its debts.
This is why it is important to engage the services of a bankruptcy attorney from the start, not when you finally find the perfect buyer. Your attorney will need information about how the process works, so he or she can discuss how to deal with lenders whose policies do not allow for pre-discharge or allowance periods. This will save you time and money.
Your bankruptcy attorney will also tell you how to negotiate for a debt discharge after your case is completed and you have been discharged from your mortgage. This is another topic that he or she will discuss with you. There are some lenders who will agree to discharge some, but not all of your debts. You must have a plan that includes all of your creditors and any plan can be written by you or your attorney.
Your attorney will be able to guide you through the process and give you the answers to any questions you might have. It may be wise to take an initial consultation before hiring any bankruptcy attorney. This gives you the chance to see if they are someone you feel comfortable with and have a good sense of humor and a positive attitude about their work.