Preparation is necessary in any area of law, but even the simplest of bankruptcy cases involves a tremendous amount of collaborative preparation between clients and attorneys. A client must provide detailed and extensive information that the attorney must review thoroughly in order to discuss the client’s options, including non-bankruptcy debt relief. Without this, the attorney cannot understand a person’s financial situation and give advice on the range of options to be considered prior to any work in preparation of a bankruptcy filing, if this action would be the best way to achieve a client’s reasonable objectives.
When bankruptcy appears to be the best choice after a thorough assessment of all possibilities, even more preparation and collaboration is required to successfully navigate this process. At its most basic level, bankruptcy involves the interplay among a person’s debts, assets, and budget. A bankruptcy should not be filed unless there is sufficient debt that can be handled through one of the various types of bankruptcy. This amount of debt is somewhat relative as it would depend on your financial situation viewed as a whole because, for example, the less income that you receive in an average month, the fewer non-bankruptcy options that will be available at any level of debt.
Meanwhile, your necessary monthly expenses (such as shelter, utilities, and food) also must be examined closely because, if these expenses generally are larger than income on average during the prior six months or more, then you need to address this problem prior to pursuing a bankruptcy. Again, this means preparation by you to provide all of the information about these financial matters so that the attorney can prepare an accurate analysis of what benefits and problems are likely if you file for bankruptcy.
As for assets, most people want to protect what they have. The attorney needs full disclosure in order to determine what might be lost if you seek the protection under a particular bankruptcy chapter. For example, a basic objective of a Chapter 7 bankruptcy is to discharge debt while protecting property through the use of exemptions. The other common type of bankruptcy for individuals involves Chapter 13 of the Bankruptcy Code. You may have fallen behind on payments of a debt for which specific property of yours acts as collateral, essentially. This could be mortgage debt that is secured by your home. What can you do? It depends on the facts of your situation. Your preparation of these facts for the attorney’s review must be thoroughly for the attorney to be able to present the realistic options that are available to you.
There is a reason that detailed preparation by both you and the attorney is emphasized here. At the beginning of any discussion of a person’s financial problems, the attorney has to see various documents to have solid foundation for developing the set of possible actions that you need to consider. Meanwhile, the attorney has to help you with this preparation by requesting the necessary information. Billing statements, loan documentation, tax returns, paystubs, bank statements, and credit reports are some of the pieces that are required to understand the situation. You and your attorney must work together to put all of the necessary pieces together.
The attorney must take the time to be sure that you are aware of the need for full and accurate disclosure. Debts owed to friends and family are debts that have to be included in a bankruptcy. The inventory of assets has to be complete so that your property can be protected to the greatest degree possible, and the attorney needs to explain how you should go about the process of placing value on all of these items, including clothing and worn-out furniture. Here, the preparation begins with the attorney and ends with you in order to get a complete picture before various schedules and forms that are included in a bankruptcy filing can be drafted. Accuracy and attention to detail are crucial during this collaborative process. Your property may be exempted, allowing you to protect it in a Chapter 7 bankruptcy. However, the attorney has to emphasize the importance of including everything that you own because anything that is not listed generally is not exempted, which means that you may lose it if you decide to file. The attorney has to be observant that things that might be overlooked are included here. Again, preparation is responsibility that falls to both you and your attorney.
In addition to information supplied by the client, the attorney has to look at outside sources, such as public records, to verify and supplement as much as possible. Also, while reviewing the provided information, the attorney must be able to spot inconsistencies in order to know what questions to ask to clarify this situation. For the attorney, preparation goes beyond filling out the forms – finding information, obtaining additional information, and explaining why this is so important are responsibilities that the attorney owes to you as the client as well as to the court. It takes a collaborative effort for end result to be successful.