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Finance

What is a Bankruptcy Lawyer?

Dee Saale
By
Updated May 17, 2024
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A bankruptcy lawyer specializes in the various legal facets of the bankruptcy procedure. The client can be an individual, a business, or even a municipality. The duties of a bankruptcy lawyer include filing a petition declaring bankruptcy, writing reports, reviewing the client's assets, and attending hearings. Typically, when a client files for bankruptcy, he or she also faces additional legal issues connected to their financial situation, such as home foreclosures, liens, repossessions, creditor lawsuits, and garnishment of wages. Consequently, many bankruptcy lawyers represent their clients through the bankruptcy proceedings as well as for the issues that are connected to it.

A bankruptcy lawyer works with a trustee to ensure that a client's assets are properly liquidated and then sees that the creditors are paid with those assets. Or, the lawyer may work with the Court to create a plan of reorganization and creditor payment. In many cases, a good bankruptcy lawyer can help a client prevent foreclosure on their home, stop repossession of their car, and avoid garnishment of their wages.

A bankruptcy lawyer is among the most knowledgeable and accurate sources of information regarding the bankruptcy process. Bankruptcy lawyers focus on two primary kinds of bankruptcy proceedings: Chapter 7 liquidation, and Court-approved reorganization plans under Chapters 9, 11, 12 and 13. A bankruptcy attorney will be the best person to inform a debtor under which chapter they should file and to provide the details of filing for bankruptcy under that chapter.

For example, if a bankruptcy lawyer has a client who is an individual, that client may be eligible to file for either Chapter 7 or Chapter 13 bankruptcy. A good bankruptcy attorney will highlight the differences between the two chapters and how each will affect the client's life. For example, under Chapter 7, certain assets such as vacation homes, second cars, and family heirlooms may be liquidated to pay off debtors, but there is not a repayment plan. In the alternative, under Chapter 13, the debtor continues to own his or her property, but creditors must be paid according to a Court-approved plan.

Bankruptcy lawyers may also have clients who are business entities. If a business is in financial trouble, its attorney may instruct it to file for Chapter 11 bankruptcy. Consequently, the business is allowed to maintain its current business operations, but it must repay its creditors according to a reorganization plan devised by the court.

In other cases, the bankruptcy lawyer may have a municipality, such as a city, town, village, county or school district, as a client. In those cases, the municipality can file for Chapter 9 bankruptcy and, in essence, reorganize. Lastly, some lawyers may specialize in Chapter 12 bankruptcy proceedings, reserved specifically for family farmers.

A good place to look for a bankruptcy lawyer is through a specific state’s local Bar Association website. Bankruptcy laws can vary from state to state; so it is important to find a reputable attorney or law firm that specializes in bankruptcy in the state where the debtor resides.

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Dee Saale
By Dee Saale

Dee is a freelance writer based in Colorado. She has a B.A. in English Literature, as well as a law degree. Dee is especially interested in topics relating to medicine, legal issues, and home improvement, which are her specialty when contributing to WiseGEEK.

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Discussion Comments

By Melonlity — On Dec 29, 2014

@Markerrag -- Student loan debt is a very real problem for people and I am not sure they understand that they cannot get rid of that in bankruptcy when they take on all that debt. Heck, I am not sure that people think of going bankrupt when they take out loans to go to college. They probably figure their education will pay off for them, and it often does.

A good number of students are spooked by the prospect of taking out student loan debt and decide to enlist in the military instead. That is not a bad way to go, really.

By the way, I think you and Terrificli got it wrong. Chapter 11 is usually for businesses. Chapter 13 is about the same thing but it is for consumers. It is true that a lot of people who would have been able to file a Chapter 7 years ago have to rely on a Chapter 13 these days.

That is rough on both consumers and lawyers. A Chapter 13 is a lot more complex that a Chapter 7 case. If you don't have a Chapter 13 lawyer who knows what he is doing, you can wind up in a lot of trouble.

By Markerrag — On Dec 28, 2014

@Terrificli -- There is one kind of debt you cannot get rid of regardless of what bankruptcy lawyer you get. I am speaking, of course, about student loans.

That is a problem for a lot of people. College has gotten very expensive and student loan debts are very high for a lot of people. I know one bankruptcy lawyer who specializes in filing Chapter 11s simply so people can get some relief (creditors can't collect those loans while a Chapter 11 plan is active) and, hopefully, see their incomes improve to a point where they can afford to pay back their loans after their bankruptcy has ended and they have received a discharge.

By Terrificli — On Dec 27, 2014

Good luck filing a Chapter 7 bankruptcy. Those used to be very common, but reforms passed by Congress have made it very difficult to file under that chapter anymore. If you have a steady job, in fact, you can almost guarantee that you will be put in a Chapter 11. The point of that chapter is to give you enough money to live on, send the rest to your creditors for five years and then discharge what debts remain after that time.

That is a lot different from a Chapter 7 that allows debtors to discharge all of their debts, reaffirm things like cars and houses if that is what the debtor wants to go and then go on with their lives.

Dee Saale

Dee Saale

Dee is a freelance writer based in Colorado. She has a B.A. in English Literature, as well as a law degree. Dee is...

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