Personal bankruptcy in America has very unfortunately become a common place event. Although the stigma of feeling like a deadbeat is very much alive in older Americans filing, Big Business has begun using it as a normal tool in doing business. They have been successful in manipulating the bankruptcy judges into completely wiping out medical and pension benefits for their employees. But that's another story.
A personal bankruptcy filing does not require the usage of an attorney, but I would strongly advise retaining one who specializes in bankruptcy, there are hundreds anymore.
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Another thing I'd strongly suggest, shop around for the amount of fees the lawyer charges. When I researched comparison pricing in the Midwest, I found they ranged from $500 + court fees to $5400 + court fees. This is a personal bankruptcy, it's not a complicated conglomerate filing for reorganization. There's no reason to charge $5400 except pure greed. This is not a "You get what you pay for" situation. This is a "Kick the dog while he's down" situation.
Whether you retain a lawyer or not you'll still be required to produce a ton of records for the court. If you've ever bought a house, it's similar to that experience.
Here is a list of items you'll be required to produce, although not all inclusive, income tax returns, bank statements, utility receipts, rent receipts, credit card bills, auto payments, medical expenses and personal expenses.
As you can begin to see, you're best bet is to gather every bit of information on any and all expenses you have and give them to the lawyer. You never know what's excluded and what isn't. For instance, if you smoke you are allowed a deduction for that expense or pet food. See what I mean?
Here's a warning and an example of trying to go too conservative on living expenses.
This person lived in a $300,000 dollar home, drove a Mercedes and had a good paying job. Suddenly he lost his job to downsizing, which put so much stress on his marriage, it ended in divorce. Now, remember, this is a good hard working guy.
He went from living in a relative mansion to a sub par apartment. It wasn't a rat hole, although it quickly could have become one, he could have afforded better, but he was trying to live cheap. He sold his car and bought a 12 year old junker, but mechanically sound. He bought generic medications against his doctor's advise, because they were cheaper.
Finally defeated by debt he went to a bankruptcy lawyer to get help filing. Follow this closely, although being in financial ruin, his pension and social security, which were not to be legally figured into a chapter 7 filing, are by Federal bankruptcy judges of Chapter 7 filings, but not for a chapter 13 filing.
This is difficult to explain and I'm not giving legal advise. The long and short of the story is the lawyer told him he didn't have enough bills to file a Chapter 7 (which discharges all debts) in spite his income being $2500 a month with expenses of $5675 a month, mainly due to credit card expenses of his ex-spouse. The Lawyer told him he should have rented a higher priced apartment and never have gotten rid of his car loan. He was forced in Chapter 13 which requires him to pay a certain monthly amount to the Bankruptcy Trustee for 3 years.
Now he's in the situation, because he tried to live frugal and stay within his means, where he can't afford a better place to live for at least 3 years.
One last strong suggestion. If you reach a point where you can honestly say to yourself "I'm in over my head" and are contemplating filing for bankruptcy, do not wait till the last moment to seek legal advise. Find an attorney and talk to him/her in advance. Listen Very, Very carefully to what they say. A lawyer will never tell you to break the law or do anything unscrupulous, but they very well may guide you to actions which benefit you and not the credit card companies, through innuendos or hypothetical stories.
Bankruptcy is a horrible thing to go through, mainly because of your own self disgust and feeling like a failure and I'm not discounting this. But try looking at it this way. The craze was credit card companies and banks didn't hesitate to give unlimited credit limits and $300,000 home loans to people making $25,000 a year. Everyone was jumping on the bandwagon to keep up with the Jones.
Well, personal bankruptcy is the new craze and to keep up with the Jones it's quite possibly something you'll have to do.
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