Things to Consider Before Hiring a Bankruptcy Lawyer

With so many people in to far with debt these days, many are considering bankruptcy to get out of this dilemma. While this can help, it can also have negative effects on your life for many years to come. So before seeing a bankruptcy attorney you should consider the following.

Bankruptcy laws have changed in the last year. No longer can people claim Chapter 7 to eliminate your debt and start over, except for certain circumstances. This used to be how people filed, and it was nice to see the debt completely disappear. But as of October 17, 2005 most people can no longer claim it. Now they must claim Chapter 13, which sets a repayment plan. The Chapter 13 claim also means you have to go to credit counseling so that you won't get back into the same debt you are in currently. These counselors cost money, which will add to your total debt. Also your assets are inflated so that it looks as if you have more to repay your bankruptcy with, and thus the creditors can get more out of you in the repayment plan. But a bankruptcy lawyer is going to know the law better than you could learn it by reading a few books. They can help protect you from creditor harassment while you wait for your case to be completed. And creditors can and will still call to harass you about paying off your debt to them. A good bankruptcy lawyer will call and make them stop contacting you about it.

Bankruptcy will wreak havoc on your credit rating as well. People who claim bankruptcy lower themselves in the eyes of creditors because it shows that you could not pay back one debt, and probably won't be able to again. It makes you high risk, which lets lenders give you a higher interest rate, which results in a higher payment for your loan. This mark against you lasts five years. After that, it will disappear off your credit report. Even with good credit in that five-year period, you have the black mark of bankruptcy on your report. So even if you get a small loan and pay on it without any problems for four years and ten months or if you attempt to get a loan in the eleventh month of the fourth year, it can still hurt you.