Few would dispute the fact that deciding to file for bankruptcy is a hard decision that usually comes after attempts to ease the financial overload fail. Once this decision is made, however, it may seem that all one has to do is file for bankruptcy and wait for the court to discharge any outstanding debts. Before taking this step, and maybe even before hiring a bankruptcy attorney, those contemplating bankruptcy should arm themselves with information so they know what to expect, and in response, can take certain steps to make the process easier and leave themselves in the best possible position once the bankruptcy case is over.

Before discussing these issues, though, a basic understanding of what declaring bankruptcy means should be reviewed. Most consumers are familiar with the Chapter 7 bankruptcy process. This type of bankruptcy is available to individuals who primarily have consumer debts, and few to no assets with which to pay off creditors. The result of Chapter 7 bankruptcy is to discharge, or release, a debtor from the legal obligation to pay off his or her creditors, minus some exceptions for things like student loans, child support, and certain tax debt. While this legal option to relieve an individual from debt he or she has no feasible ability to pay is a good feature of the American legal system, there are some issues all bankruptcy debtors need to address.

Paying for the Bankruptcy

While Chapter 7 bankruptcy offers debt relief in the long term, there are unavoidable costs associated with bankruptcy cases that debtors must cover to move forward with the bankruptcy petition. These costs primarily fall into two categories: filing fees and court costs, and the legal fees for the bankruptcy attorney. The basic filing fee for all Chapter 7 bankruptcy cases is $335, and payment is typically required when the bankruptcy petition is filed. Debtors are offered the option of paying the filing fees in four installments, or requesting the fee be waived if the debtor meets certain income requirements. Certainly, raising the money needed to file and pay an attorney to process a bankruptcy is not easy, but there are some proactive steps debtors can take to prepare themselves for these costs.

• Reduce outgoing expenditures by stopping payments to credit card companies. These debts will be wiped out in a Chapter 7 bankruptcy anyway, so save this money to put towards bankruptcy costs.
• Generate extra income by taking on a part time job, or selling personal property, like electronics.
• Discuss payment options with a bankruptcy attorney. Bankruptcy cases are often billed on a fixed-fee basis to keep the costs lower, and sometimes, payment plans are available for those in difficult financial circumstances.

Filing a bankruptcy case without an attorney may seem like an easy way to save a lot of money, but bankruptcy cases are subject to very complicated rules that, if broken, can affect the ability to discharge debt. Consequently, not using an experienced bankruptcy attorney may not be a viable option.

Post-Bankruptcy Financial Picture

Another practical set of information anyone considering bankruptcy should learn is the short- and long-term consequences of declaring bankruptcy. In the short term, bankruptcy will stop creditor phone calls, delay foreclosure, and suspend legal actions to collect debt. In the long term, bankruptcy has a negative effect on a person’s credit report for 10 years, which limits a person’s ability to get loans (especially mortgages) and new credit will often come with higher interest rates and lower limits. However, declaring bankruptcy does show lenders the person is taking steps to fix financial issues, and is the right choice for some people.

Hire an Indiana Bankruptcy Lawyer

If you have overwhelming financial obligations that are keeping you up at night, talk to a bankruptcy attorney about whether filing for bankruptcy is right for you. Attorney Christopher L. Arrington helps clients throughout the Indianapolis area, and he can help you get back on your feet. Contact him today to schedule an appointment.