Consumer's Guide to Bankruptcy

WHAT WILL YOU GET FROM THIS GUIDE?

A basic understanding of the 2 main types of consumer bankruptcy, valuable insights into evaluating bankruptcy as a debt reduction tool,

and practical guidance for finding a quality bankruptcy attorney.

Topics covered:

- An overview of the bankruptcy process. - Key bankruptcy terms like: “discharge,” “automatic stay,” and “exemptions.” - Chapter 7 bankruptcy: what it is, how it works, and when it is preferred. - Chapter 13 bankruptcy: what it is, how it works, and when it is preferred. - How bankruptcy can save a home from foreclosure or a car from repossession. - 5 good reasons to file bankruptcy. - 5 good reasons not to file bankruptcy. - 3 alternatives to filing for bankruptcy. - 5 questions to ask when interviewing a prospective bankruptcy attorney.

CONSUMER’S GUIDE TO

BANKRUPTCY

Got a question about your situation or something you read in this guide? Feel free to email me at [email protected], call me at 615-807-1064,

or visit my website at www.llgtn.com.

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Dear Friend, Deciding if you need to file for bankruptcy is not an easy thing. Why not? Because you do not know if it can help your situation, but you do know there is a lot of emotion that goes along with just thinking about filing. How do you assess bankruptcy as a potential solution to your debt problems? How can you look past the emotional to consider the practical? You begin by reading this guide.

I wrote this guide so that individuals, couples, and families just like you can get a better understanding of the bankruptcy process and the different solutions available to you. There is a lot of misinformation out there about bankruptcy, and there are some great aspects of bankruptcy that most people do not know about. For those of you that are considering filing bankruptcy as a means to get out of debt, this guide should be invaluable.

I work in Franklin, Tennessee, but the truths and the principles contained in this guide should apply to you no matter what state you live in. And because I am an attorney, I have to provide a disclaimer about the content and purpose of this guide1.

I practice bankruptcy law because I get to meet a variety of people from different walks of life and help them walk through their difficult financial situations. I get to see marriages restored, pride returned, burdens lifted, and shame fade away. It is an absolute blessing to do what I do. If you have any questions about what you read in this guide, please feel free to call me at 615-807-1064 or email me at [email protected].

Cordially,

Gordon�� H.�� Boutwell��

1 This guide is for informational purposes only and should not be taken as legal advice or as legal opinion. No attorney-client relationship is created by your reading, using, or relying upon information found within this guide. You should contact your attorney to obtain advice with respect to your particular issue or problem. While I intend to make every effort to ensure that all information in this guide is accurate and current, I do not make any representation or assume liability for the content, accuracy, timeliness, completeness or any other aspect of the information provided.



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What is bankruptcy?..................................................................................................................4 Terms you need to know:

DISCHARGE........................................................................................................6 AUTOMATIC STAY..........................................................................................7 EXEMPTIONS......................................................................................................8

Chapter 7 bankruptcy...........................................................................................................10 Chapter 13 bankruptcy.........................................................................................................11 Saving a home from foreclosure or a car from repossession.............................12 5 good reasons to file bankruptcy...................................................................................13 5 good reasons not to file bankruptcy...........................................................................16 3 alternatives to filing for bankruptcy...........................................................................19 5 questions to ask when meeting a prospective bankruptcy attorney............20 About the author……………………………………………………………….…25

TABLE OF CONTENTS



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WHAT IS BANKRUPTCY?

Bankruptcy is a legal process in which individuals, couples, families, and businesses can eliminate, repay, or restructure some or all of their debts.

There are 2 main types of consumer bankruptcies: Chapter 7 and Chapter 13. Both help you with your debt, but in very different ways. As you consider bankruptcy as a possible debt resolution tool, it is important to know how and to what extent each chapter eliminates debt, and what is required of you during each, so that you can know which option is the best for you.

WHY FILE? People file bankruptcies for a variety of reasons. You may file to obtain a discharge of their debts. The discharge frees you from your oppressive financial situation, and provides you a fresh financial start, by eliminating some or all of your debts.

You could also file to invoke the automatic stay, which can stop creditor harassment and lawsuits, and protect your house from foreclosure, your car from repossession or your paycheck from garnishment. Others file to restructure and consolidate debt into a manageable payment.



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WHAT IS BANKRUPTCY?

BASIC BANKRUPTCY REQUIREMENTS In any bankruptcy you must provide certain information to the Court, your creditors, and your Trustee (a court appointed attorney that oversees your case). The typical case requires you to detail:

1. All of your assets (everything you own); 2. All of your liabilities (everyone you owe); 3. Your current and expected future income; 4. Your current and expected future expenses; 5. The specific state laws that you are using to

exempt your assets from your creditors. You must also file certain documents, including:

1. A statement of your recent financial affairs; 2. A certificate of credit counseling from an

approved provider (or a waiver); 3. Your most recent tax return; 4. Your most recent 60 days’ worth of pay stubs

or other proof of income. At some point during your case you will go to what is called a “Meeting of Creditors,” where your Trustee and your creditors have the right to ask you questions about your case. For the vast majority of debtors, this is the only time you will go to “Court,” and few, if any, creditors will attend.

Bankruptcy is a legal proceeding in federal court in which a person with more debts than they can pay seeks relief from those debts.



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WHAT IS A BANKRUPTCY DISCHARGE?

One of the main reasons why people file bankruptcy is to obtain a discharge of their debts. When you complete your bankruptcy case, you no longer owe the debts that were discharged, and the creditors can never come after you to collect on those debts ever again. Not all of your debts will necessarily be discharged. Certain types of debts will not be discharged as a matter of law, and other debts may not be discharged because of something you have done or not done.

The bankruptcy discharge releases a debtor from their obligation to repay certain debts, and it also protects debtors when creditors attempt to collect on these debts.

COMMON NON-DISCHARGEABLE DEBTS 1. Domestic Support

Obligations (child support & alimony);

2. Student Loans (unless certain circumstances exist);

3. Debts for money obtained by lying or through deceit (like fraud, larceny, false representations, or embezzlement);

4. Debts arising out of willful or malicious injury;

5. Debts not listed on the schedules.

COMMON DISCHARGEABLE DEBTS 1. Credit cards; 2. Medical bills; 3. Personal loans; 4. Check advances; 5. Fees owed to

professionals (like attorneys and CPAs);

6. Deficiencies for foreclosed homes and repossessed vehicles.



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WHAT IS THE AUTOMATIC STAY?

The automatic stay is a shield that prevents creditors from contacting a debtor, harassing a debtor, or continuing their efforts to collect against a debtor once they have filed a bankruptcy case.

In addition to the bankruptcy discharge, one of the other main reasons why people file for bankruptcy is the automatic stay. The stay goes into effect automatically and immediately upon the filing of your case.1 The bankruptcy automatic stay immediately stops LAWSUITS, FORECLOSURES, GARNISHMENTS, and all collection efforts against you and your property. The automatic stay is not an absolute shield, though. It will not stop the commencement or the continuation of certain civil and criminal actions. COMMONLY “STAYED” ACTIONS 1. The beginning or

continuing of a lawsuit or other judicial proceeding against you;

2. The enforcement or execution of a judgment against you;

3. Actions to obtain possession or exercise control over your property;

4. Actions to create, perfect, or enforce a lien against your property;

COMMON ACTIONS THAT WILL CONTINUE 1. Criminal actions; 2. Civil action for

dissolution of marriage;

3. Civil action for establishment or modification of a domestic support obligation;

4. Civil actions for establishment of paternity.



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Exemptions are the laws that shield a debtor’s assets from their creditors and permit debtors to retain property after the conclusion of their bankruptcy.

WHAT ARE EXEMPTIONS?

THE MYTH One of the most common misconceptions about bankruptcy is that you lose everything you own when you file. For the vast majority of consumers, this is simply not true. In 2010, there were 1.139 million Chapter 7 bankruptcies, and less than 6% of these case resulted in a debtor losing assets.

THE TRUTH How is this possible? Well, first off, the purpose of bankruptcy is not to punish you for your past. Second, when you come out of your bankruptcy, you need to retain certain necessities of life in order to make the most of your fresh start. By applying exemptions against your personal property and your home, you shield your assets from your creditors, and you retain them after the conclusion of your bankruptcy. LIMITATIONS There are limitations to how much property you can protect. Any personal property or home equity that is not protectable can potentially be seized for the benefit of creditors. Some common Tennessee exemptions are listed on the next page.



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WHAT ARE EXEMPTIONS?

YOUR PERSONAL PROPERTY Tennessee state law allows you to protect your personal property to a certain degree. Here are a few of the most notable exemptions. 1. $10,000 of personal property,

including money and bank accounts, household goods and furnishings, jewelry, firearms, sports and hobby equipment, and motor vehicles to the extent they are not secured by a lien.

2. $1,900 worth of tools of your trade, including instruments, books, and other tools used in your profession.

3. 100% of Health Savings

Accounts, 401ks, IRAs, pensions, and other qualified retirement plans.

4. 100% of Social Security, Disability, and workers’ compensation benefits.

YOUR REAL PROPERTY (HOME) In the state of Tennessee, the amount of equity in your home that you can exempt depends upon your age, whether you are filing with your spouse, and whether you have minor children in your legal custody. • If you are any age, with custody

of minor children, you can protect $25,000 of your home equity if you file by yourself, or $50,000 if you file with your spouse.

• If you are under the age of 62, without custody of minor children, then you can protect $5,000 of your home equity if you file by yourself, or $7,500 if you file with your spouse.

• If you are over the age of 62, without custody of minor children, then you can protect $12,500 of your home equity if you file by yourself or $20,000 (if only one of you is over the age of 62) or $25,000 if you file with your spouse (and both of you are over the age of 62).



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Chapter 7 is called Liquidation. It is also referred to as “straight” bankruptcy.

CHAPTER 7 BANKRUPTCY

HOW IT WORKS • An appointed Chapter 7 Trustee liquidates any of

your non-‐exempt assets and uses the proceeds to pay your creditors. PLEASE NOTE: Rarely are there any assets to liquidate, as the laws of the state of Tennessee usually allow you to protect most, if not all, of your assets.

• You must qualify for 7 by passing the “Means Test,” which compares your average monthly income to that of a similarly sized household in Tennessee.

• Most Chapter 7s last about 4 months, from the date you file until the date you receive your discharge of your debts.

WHAT HAPPENS TO THE DEBTS? • In most cases, your unsecured debt (e.g., credit

cards, medical bills, signature and personal loans, vehicle repo or home foreclosure deficiencies) will be discharged. Student Loans will most likely not be discharged, though.

• Most priority debts like income taxes and domestic support obligations survive the discharge, meaning that you will continue to owe them after you receive your discharge.

• You usually can choose whether and how you want to keep your secured debts (e.g., vehicle with a loan, home with a mortgage)

• You may choose to surrender a secured asset without owing a deficiency that arises when your creditor resells it.

WHEN IS CHAPTER 7 PREFERRED? • Most if not all of your

debts are unsecured. • You are current on the

secured debts you want to keep, or you wish to surrender the secured collateral back to the creditor.

• Your assets are fully protected by state exemptions.



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CHAPTER 13 BANKRUPTCY

Chapter 13 bankruptcy is called Adjustment of Debts of An Individual with Regular Income.

WHEN IS CHAPTER 13 PREFERRED? • You are facing

foreclosure on your home or repossession of your car.

• You have assets that are not protected by state exemptions that you do not want to lose, like a home with significant equity or a vehicle with no lien.

• You have significant tax debt that you want to repay in a finite time without further penalties and interest.

HOW IT WORKS • Chapter 13 is a 3 to 5 year repayment plan that

consolidates your debts into a manageable payment.

• You make regular payments to the Chapter 13 Trustee, who in turn sends the money to your creditors according to the plan that you have put together and that the court and creditors confirm.

• The amount of money that you repay your creditors is based upon your monthly income and expenses, as well as your assets.

WHAT HAPPENS TO THE DEBTS? • In most cases, you will repay a certain percentage

of your unsecured debt and all of your secured debts (excluding long-‐term debts like mortgages). When you finish your plan, usually all you will owe will be your continuing mortgage.

• You can potentially lower your interest rate and monthly payment on your car and other secured debts

• Your plan will most likely pay back any IRS tax debt or domestic support obligations that you owe.



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Foreclosure is a legal process in which a secured lender retakes ownership and control of a piece of real property from the borrower.

AVOIDING FORECLOSURE Countless people have used Chapter 13 for just this purpose. When your mortgage company will not work with you as you try to catch up your payments, or when your attempts to modify your mortgage fail, filing a 3 may be your best option to retain the home and work out a repayment plan for what you owe on it.

Even if your mortgage company has begun the foreclosure process, you may still have time to file for Chapter 13. In most circumstances, the filing of a bankruptcy will invoke the automatic stay, stopping the foreclosure from happening. So long as you comply with your plan and meet all your obligations during your Chapter 13, the mortgage company should not be able to touch your home.

13 deals with your mortgage in 2 important ways: 1. It makes the continuing mortgage payment due

on the house; and 2. It pays all the arrearages due to the mortgage

company so that you become current by the time you complete your case.

Did you know that you can save your home from foreclosure or your car from repossession by filing Chapter 13 bankruptcy? It’s true. In a Chapter 13 you can put together a plan to keep your home, your car, and other collateral that a creditor is threatening to take back.

AVOIDING REPOSSESSION If your are behind on your car payments, and the lender is threatening to repossess it, you can file Chapter 13 and propose to repay the loan, late fees, etc. through your plan. Once the case is filed, the automatic stay goes into effect, and the creditor cannot come pick up your vehicle.

In some situations, you may be able to regain possession of a vehicle that has been recently repossessed by filing Chapter 13.

FORECLOSURE AND REPOSSESSION



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1. YOU DO NOT HAVE ENOUGH INCOME TO PAY YOUR LIVING EXPENSES AND YOUR DEBTS. This is one of the most common reasons to file for bankruptcy. There is simply not enough money left over at the end of the month to pay your living expenses and your bills. You could have had significant medical illness or injury or loss of employment or reduction in pay.

Regardless of the reason, you cannot seem to get ahead, you feel like all you are doing is spinning your wheels, and you cannot see a light at the end of the tunnel. You would love to be saving money each month, but your minimum payments on your loans and credit cards and the like make that impossible.

Bankruptcy may be a good way for you to break the cycle of financial distress and start over. It is designed to give you a fresh financial start by eliminating most (if not all) of your debts while allowing you to keep most (if not all) of your possessions.

5 GOOD REASONS TO FILE BANKRUPTCY

Not sure if filing bankruptcy is for you?

Here are five situations in which filing bankruptcy, or at least talking with someone about it, would be a good idea.



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The filing of a bankruptcy protects you from creditor harassment and wage garnishment. When you file, the automatic stay immediately goes into effect, and your creditors are prohibited from continuing to call you to collect, they cannot sue you for your debt, and they must stop the garnishment on your check. 3. YOU HAVE A MOUNTAIN OF DEBT AND IT WOULD TAKE YOU FOREVER TO DIG OUT FROM UNDER IT. It is possible that, while you have money left over at the end of the month to pay your debts, you simply have such a large amount of debt that it would take you years and years to come out from underneath it all. No doubt there is incredible value in working a debt repayment plan and seeing it through to the end. On the other hand, if you feel that you have learned from your past and know how to better prepare for the future, or if you want to get out from underneath your debts sooner rather than later, then bankruptcy may be a good choice for you.


2. YOUR CREDITORS WILL NOT STOP HARRASSING YOU OR YOUR WAGES ARE BEING GARNISHED. If you are behind on a bill, the creditor has the right to call you to collect on that debt. They must comply with the provisions of the Fair Debt Collection Practices Act, which is something you should definitely read through. You can find a copy of the act here: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf Some creditors are more aggressive than others, and no matter how dire your financial situation, they demand more of you than you can offer. They want a payment sooner than you can provide or they want more money than you can afford to pay. They will not listen to reason and they call at all times of the day and into the evening, demanding payment. Or perhaps they have already sued you and gotten a judgment. Now your paycheck is being garnished, and you are struggling even more to make ends meet.



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5. YOU HAVE A MORTGAGE ON AND POSSESSION OF A HOME THAT YOU NO LONGER WANT OR CANNOT AFFORD. Many people file bankruptcies to retain a home that is in foreclosure, but what can you do when you do not want to keep your house anymore? Maybe you are having a hard time selling it, or you owe more on the house than it is worth. Or you got divorced and your ex stuck you with the mortgage note.

In most bankruptcies, you can surrender the home back to the mortgage company and not owe on the mortgage once you get your discharge. The mortgage company will eventually remove the property from your name, either by foreclosure or a deed-‐in-‐lieu of foreclosure or something similar. You will still be liable for any homeowner’s association fees that you have with the property until the mortgage company obtains possession.

4. YOUR RELATIONSHIPS ARE SUFFERING BECAUSE OF YOUR STRUGGLES WITH DEBT. Money problems can devastate relationships. The most solid marriage or family can be torn apart over issues of money. The most mild-‐mannered and gentile man or woman can become an absolute jerk when finances are too tight. When your situation has become dire, and you can feel your important relationships unraveling, it may be time to take some drastic action. You may have never thought that you would be one of “those people” that file bankruptcy. There is no shame in filing bankruptcy. You are not a bad person for filing. You can take responsibility for your financial situation instead of letting it get worse and hurting you and your family even more.



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5 GOOD REASONS NOT TO FILE BANKRUPTCY

What does this all mean? You get rid of some debt, you still owe on the nondischargeable debts, and you need a smart repayment plan to address those debts. You would have to do that even if you do not file bankruptcy, so what do you really gain by filing?

It is important to know which of your debts will be discharged, and which will not, so that you can properly evaluate bankruptcy as a possible debt elimination tool.

1. MOST OF YOUR DEBTS ARE NON-DISCHARGEABLE, SO BANKRUPTCY DOES NOT HELP YOU. Bankruptcy is a great tool to eliminate debt, and it can wipe out most debts, but there are certain debts that your bankruptcy cannot eliminate. If a large portion of your debts is not going to be discharged in bankruptcy, then you should strongly consider whether filing bankruptcy makes sense.

For instance, suppose you want to file Chapter 7 to get rid of some credit card debt but you also owe a lot of student loan debt. In this situation, filing for Chapter 7 bankruptcy will likely not do a lot for you. Sure, you got rid of some credit card debt, but your student loans will most likely not be discharged in your bankruptcy. The same is true with most taxes, child support and alimony, and other nondischargeable debts (for more about nondischargeable debts, please read through page 6 of this guide).

Where a large portion of your debt will not going to be discharged, then filing for bankruptcy may not be your wisest course of action.



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2. YOU HAVE THE FINANCIAL MEANS

TO GET OUT OF DEBT YOURSELF, AND BANKRUPTCY DOES NOTHING SPECIAL FOR YOU. Your situation may not be as dire as you think. You may be able to pay them off yourself without filing for bankruptcy. Your income and your expenses drive your debt repayment options. If you make significantly more per month than you spend, then you should strongly consider setting up debt repayment plans with your individual creditors. If you make a lot of money, and you do decide to file a bankruptcy, then you may be required to repay all or a large part of your debt back to the creditors. In so doing, you have forfeited the ability to try to negotiate the balances on the debts, and you have paid your attorney and your Trustee to oversee your case.


Unless you gain something extra by filing the bankruptcy, then it may not be your best option. That something extra for you may mean the ability to can catch up your mortgage payments over time, surrender your home without penalty, or pay off your student loans or tax debt in a finite time. 3. YOUR EMPLOYMENT DEPENDS UPON YOUR CREDIT SCORE. Several professions, especially those that require major financial responsibilities, place a large value upon credit score. Filing for bankruptcy will have a negative impact your credit score. But the bankruptcy may only have a relatively small impact on your score because of the history of late payments, large debts, and other financial issues that drove you to file for bankruptcy in the first place. Current and future employers cannot discriminate against you because you filed.



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5. EVEN WITH A DISCHARGE, YOU DO NOT HAVE ENOUGH MONTHLY INCOME TO MEET YOUR MONTHLY EXPENSES. Bankruptcy is designed to be a springboard to a new life. It should help you not only in the short term, but the long term as well. Ideally, without the burden of your debts, you can save, make your income work for you, and plan for your future. The last thing you want to do is to file a bankruptcy where you have no hope of a better life upon its completion.

As an example, if you have monthly income of $2,000, but your monthly expenses alone are $2,500, then filing for bankruptcy does not help you in the long run. Bankruptcy provides you some relief by eliminating some debt, but you will be right back where you started in a matter of months because your income is greater than your expenses. If you do not have the means to move on with your life after bankruptcy, then it may not be the right time to file.


4. YOU HAVE ASSETS THAT YOU DO NOT WANT TO LOSE. If you have more equity in your home or belongings than you can protect by law, then you run the risk of losing that asset if you file for Chapter 7. The Trustee would see if taking the asset makes money for your creditors, and if so, then the Trustee will require you to turn it over.

You have 2 options in this situation: 1. File Chapter 13 bankruptcy, and

repay your creditors the value of the asset, which could require you to repay most or all of your unsecured debt.

2. Sell the asset yourself and negotiate with your creditors with the proceeds outside of bankruptcy.



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3 ALTERNATIVES TO FILING FOR BANKRUPTCY

3. NEGOTIATE YOUR DEBTS. Debt negotiation is a method of debt reduction in which you and your creditors agree to a settlement of your debt for less than what you owe. The goal of debt negotiation is to eliminate your debt in the manner that makes the most financial sense for you. That could mean payments over time, a lump-‐sum payment, or some combination of both. You can negotiate your debts yourself, or you can hire a third party like an attorney or debt management group to help you.

1. DO NOTHING. This is always a choice. You can ignore the collection notices, not answer the creditors’ calls, and avoid the certified letters waiting for you at the Post Office. You can bury your head in the sand and pray that your creditors give up, quit calling, or forget where you live. But you do not get out of debt by avoiding it. You get out of debt by being proactive, getting help, and having a plan. 2. PAY OFF YOUR DEBTS IN FULL. This is exactly what it sounds like. You have debt and you repay it all. You pay at least your minimum payments every month, you sell things to raise extra money to make larger payments, and you attack the debt. Paying off debts in full works well when you adhere a solid budget a debt snowball plan. You can find more information online on these topics.



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How do you choose your bankruptcy attorney? Start with these 5 questions.

At some point in your journey to get out of debt, you may decide to speak with a bankruptcy attorney for a variety of reasons. A lot of people go just to learn more about how bankruptcy works, while others meet with an attorney for the specific goal of filing.

Regardless of your reason, you want to make a wise decision when you choose a bankruptcy attorney to represent you. You are going to pay money to this person to perform a service for you, and you deserve to have the service performed properly and timely. In the care of an experienced, competent bankruptcy attorney, you should know what to expect from the start of your case, whether there are any potential pitfalls or complications and what can be done about them, and how the case should conclude. The presence and counsel of a seasoned professional can help make the bankruptcy process fell a little less nerve-‐racking. To help you in choosing a bankruptcy attorney, here are 5 questions to ask during your initial consultation. The attorney will ask you numerous questions to get a better understanding of your situation and what can be done about it. In turn, you should ask the attorney some questions to get a better feel for their ability to adequately represent you.

THE 5 QUESTIONS TO ASK: 1. What is your background

in bankruptcy?

2. How does bankruptcy compare with my other options for getting out of debt?

3. How much does it cost to

file Chapter 7 or 13? 4. How much will I see and

talk to you personally during my case?

5. How does your practice

differ from your competition?

5 QUESTIONS TO ASK WHEN MEETING A PROSPECTIVE BANKRUPTCY ATTORNEY



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1. WHAT IS YOUR BACKGROUND IN BANKRUPTCY? This question gets at the attorney’s competence to handle your case. Bankruptcy is a highly specialized area of law that requires attention to detail and strategic planning. It is not something that an attorney can just do on the side as part of their practice.

To that end, be sure you know by the end of your meeting with an attorney: A. How long this attorney has

practiced bankruptcy; B. What percentage of the

attorney’s practice is bankruptcy;

C. What percentage of the attorney’s cases are debtor or consumer, and what percentage are business cases;

D. What the attorney does to stay current on developments in the law.

2. HOW MUCH WILL I SEE/TALK TO YOU PERSONALLY DURING MY CASE? It is important to know early in the bankruptcy filing process what you should expect from your attorney. Given the nature of the practice, many attorneys have paralegals and other support staff to handle most of the meetings and communications with clients, while the attorney attends court, negotiates with other parties, and oversees the more complicated matters of the cases.

With other, smaller firms, the attorney and maybe one assistant likely handle all matters from answering the phones to meeting all the clients to preparing all the bankruptcy forms. So decide early what you want from your bankruptcy attorney, and choose accordingly.



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3. HOW MUCH DOES IT COST TO FILE CHAPTER 7 OR CHAPTER 13? Obviously one of the main concerns when you look to file bankruptcy is the cost. Bankruptcy attorneys usually do not charge hourly rates, instead charging a flat fee for their services. As you consider filing bankruptcy with a particular attorney, you should know the following: 1. The base fee for representation; 2. The services covered under this

base fee; 3. The services not covered under

the base fee; and 4. The cost for the non-‐base fee

services.

For Chapter 7, most attorneys charge a base, flat fee to prepare, file, and see a Chapter 7 through completion. The price may vary depending upon whether you file individually, with your spouse, or for your business.

As part of your agreement, the attorney may charge further fees if any unexpected complications arise or if additional services are required. The attorney’s fees for Chapter 7 are typically much less than for Chapter 13, although the attorney usually requires most if not all of their fees paid up front before the filing of the case. In Chapter 13, most of the time the attorney will elect to receive a court-‐awarded fee that is based entirely upon the debt in your case. Many firms require little or no up front fees to file 13, with the remaining portion of the fee paid through your plan. So every time you make a Chapter 13 payment, a portion of that goes to your attorney.



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4. HOW DOES BANKRUPTCY COMPARE WITH MY OTHER OPTIONS FOR GETTING OUT OF DEBT? Any good bankruptcy attorney will help you to evaluate all of your options for getting out of debt, even if that means you do not file. They should analyze your income and expenses, review your assets and liabilities, and discuss with you why bankruptcy does or does not make sense for your situation. When you are evaluating bankruptcy as an option, here’s what your attorney should explain to you, and what you need to understand before you decide to file:

A. How bankruptcy could help you

and/or hurt you; B. Which of your debts will be

discharged and which will not; C. The process for filing and

completing your particular case; D. Any potential challenges in your

case.

Unfortunately, there are many attorneys out there that care more about their best interests than yours. As you speak with an attorney about bankruptcy, be careful of those that:

A. Pressure you into filing when

you only wanted to gather information or ask questions;

B. Hastily tell you that you have no other option but to file;

C. Do not or cannot explain why filing makes the most sense for you;

D. Do not or cannot explain the consequences of filing; or

E. Disregard or belittle your other debt resolution options.



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5. HOW DOES YOUR PRACTICE DIFFER FROM YOUR COMPETITION? This is a great question because it allows the attorney to talk about what makes them special and unique. The attorney can talk about what they value, how they practice law, and you learn more about them as a person, not just as your potential representative. You can hear in the attorney’s voice if they are excited about or proud of their practice. What you can gain during this conversation is invaluable.

What are some good responses to this question? A. “I strive to provide the highest

quality service to my clients.” B. “I treat my clients the way I

would want to be treated in the same situation.”

C. “I personally answer phone calls, meet with my clients, and work every aspect of your case from start to finish.”

D. “I educate my clients on their options so that they can make the best, most well-‐informed decision possible.”

E. “I am extremely flexible in working with my clients, meeting them when their work schedule provides, even if that means after hours or on weekends.”

F. “I do my best to answer emails, phone calls, and other inquiries within twenty four hours.”




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ABOUT THE AUTHOR

GORDON BOUTWELL is a bankruptcy and consumer protection attorney in Franklin, Tennessee. He has practiced law since 2006, with most of that time dedicated to bankruptcy, personal finance, and consumer advocacy. Over the years he has helped hundreds of individuals, couples, and families with their financial problems. He believes in treating other people the way he would want to be treated in the same situation. He takes the time to get to know his clients, and he educates them on their options for getting out of debt, helping them to understand and evaluate them. He believes bankruptcy is a worthwhile tool to help some (but not all) people get out of debt, and, when combined with financial education and counseling, can be a springboard to financial independence. In March 2011, Gordon and R. Keith Gordon formed the Lodestone Legal Group in Franklin Tennessee, with the purpose of assisting business and private clients by exploring legal options, navigating the legal pitfalls, and providing measurable results through custom solutions and a commitment to the lost art of personal care and client service. Lodestone Legal Group practices in the areas of bankruptcy, debt negotiation and settlement, financial counseling, residential and commercial real estate, estate planning (wills and trusts), and small business and corporate law.

Gordon H. Boutwell, Atty Lodestone Legal Group 198 E. Main St., Ste. 4 Franklin, TN 37064 615-‐807-‐1064 [email protected] www.llgtn.com

Documents

Consumer's Guide to Bankruptcy