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Why Bankruptcy?

Michalak_Law_Firm_bankruptcyiconBankruptcy is a very useful tool to begin fixing your finances.  I noticed that there is a misconception among people that all your belongings will be lost during the bankruptcy.  In fact most of my clients do not loose anything.

It is not because I am brilliant, but due to bankruptcy exemptions.  The reasoning behind bankruptcy is to provide the new financial start, so the bankruptcy “creators” did not want to leave people empty-handed.  They created exemptions to make sure that you have a bed to sleep, money for food, and car to get to work.  There is nothing wrong with declaring bankruptcy.

Huge corporations use bankruptcy to escape from obligations that do not make sense anymore.  Those same corporations mail you credit card offers hoping that you apply and pay interest on your purchases.  Stores accept credit cards and provide financing knowing that some people will default.

SO if you ran into financial trouble there is noting wrong with declaring bankruptcy.  But before you do so, you have to know that some of the debts cannot be cleared by bankruptcy.  That’s why you should consult with an attorney to make sure that bankruptcy makes sense in your case.

Why should I hire an attorney to represent me in bankruptcy proceedings?

As an attorney I know the bankruptcy code.  I will analyze if your debts are dischargeable.  Also, I will analyze and categorize your property to use the exemptions efficiently.  The bankruptcy code allows you to keep some property, but it is up to you to categorize it to make sure that you can keep it.

If you file for bankruptcy you have to list any money yo are entitled to, such as any potential lawsuits.  For example, if you were injured in an accident, you have to list it as your asset.  The money recovered might be transferred to your creditors.  That is why it is important to analyze if you should file the bankruptcy at the given time.

What debts are non-dischargeable?

  • Student Loans – can be discharged only if paying the debt would impose undue hardship.

  • Child support and alimony

  • Taxes – have to be over 3 years old

  • Debts from intentional wrongdoing – DUI accidents, theft, fraud, etc