Posted on: 28 February 2023

Bankruptcy is a legal process that allows individuals and businesses to resolve their debts. Although bankruptcy can provide much-needed relief for those who have financial difficulties, filing for bankruptcy is a complex process and can have far-reaching consequences.

When considering filing bankruptcy, you need to understand the full implications of this decision and ensure you are taking the right steps. Bankruptcy lawyers specialize in this area of law and have the knowledge and experience to guide you through the process. Here are some situations where consulting with a bankruptcy lawyer may be beneficial.

You Are Struggling to Negotiate With Creditors

If you struggle to negotiate with your creditors, you may want to consult a bankruptcy lawyer.

A skilled bankruptcy lawyer can help protect your rights as you attempt to come up with a plan that meets both your needs and those of the creditors. They can also assist you to develop more favorable payment plans or negotiate settlements that could reduce or eliminate some of your debt obligations while at the same time helping you preserve your assets and avoid further damage to your credit score.

Bankruptcy lawyers work hard to understand the individual circumstances of each case and develop a realistic approach to addressing it with creditors. This approach can make a significant difference in the outcome of your negotiations as you can trust that the proposed solution is tailored to your specific situation.

You Have a Lot of Debts and Need Help Prioritizing Your Payments

If you are struggling with a lot of debt, it can be difficult to prioritize which debts to pay first. This decision is important as some creditors may take legal action if you don't make timely payments. Consulting with a bankruptcy lawyer can help you understand the options available and determine which debts take priority.

Your bankruptcy lawyer can give you an overview of the different types of debts and explain which ones have priority over others. For instance, if you are behind on your mortgage or car payments, those should be paid first before other unsecured debts like credit card bills. 

Secured debts, such as those associated with a mortgage or car loan, could be given priority in bankruptcy proceedings as they have collateral, such as property, that can be taken to pay off the debt. That's why you need to understand which debts have priority over others and how to best handle them.

Bankruptcy lawyers can also provide advice on how to manage your income and expenses to ensure that priority debts are paid on time. They may suggest other solutions, such as debt consolidation, that could make it easier to pay off all your debts in the long run.

For more information, contact a bankruptcy attorney near you.