I’ve seen a lot of ads for bankruptcy-related services. Should I use these companies?
Be careful of bankruptcy-related scams. There are a lot of people and companies that advertise bankruptcy-related services in order to take advantage of vulnerable, financially distressed consumers. Some advertise help with foreclosure or other issues when all they do is put you into bankruptcy without providing any advice or assistance. Many charge enormous fees or make promises they can’t keep. Don’t pay money for debt counseling, foreclosure assistance, or bankruptcy without being sure you are dealing with a reputable business.
I’ve decided I want to hire an attorney. How do I choose one?
Hiring an attorney is highly recommended if you decide to file for bankruptcy. Filing bankruptcy is a highly technical process and you will get the most protection by hiring a competent attorney. Asking around and comparing qualifications, experience, and fees is always a good start. Seek recommendations from friends, family, or other members of the community, and use the phone and internet to research and contact different attorneys. Some questions to ask:
- 1. Do you give a free initial consultation?
- 2. How much do you charge for this kind of work?
- 3. What kinds of cases do you normally handle?
- 4. How often have you handled cases like mine?
- 5. Will you need to consult with other attorneys?
- 6. About how much time will it take to resolve cases like mine?
- 7. About how much time do you usually take to return telephone calls from clients?
- 8. What methods do you use to inform your clients about what is happening in their cases?
- 9. Will you give me a list of what costs you charge for?
- 10. Are you admitted to practice in my state?
I’ve decided not to hire an attorney. Is there anywhere else I can turn for assistance when I file for bankruptcy?
Some bankruptcy filers choose to go through the bankruptcy process without an attorney. They act for themselves; this is called acting “pro se.” If you decide to file on your own, it would be helpful to get a bankruptcy reference book (they cost about $20). If you can’t afford one, you can find them in a public library, law school library, or the Federal court or local county law libraries (just ask a reference librarian to help you). Document preparation services are not usually a good place to get help with bankruptcy. These services are performed by non-lawyers for a fee and offer no assistance once the initial forms are filed. If you require assistance with your bankruptcy, it is recommended that you speak with an attorney.
Additional information for pro se bankruptcy filers is also available on the bankruptcy court’s official website: http://www.wawb.uscourts.gov/
What can I do to make sure I learn from my situation and avoid financial mistakes in the future?
At some point in the bankruptcy process it will be helpful for you to truly assess your past and what led you to bankruptcy. The purpose is not to make yourself feel bad or to blame others. It’s a “no-fault” analysis. What’s done is done. Your assessments will help you learn from the past to ensure you make future decisions that put you in a position to succeed. Sometimes in life things happen that are out of our control. However, by thinking about the things we could have controlled, it helps to make sure a similar situation never happens again. Ask yourself the following assessment questions:
- Prior to a financial challenge, did you build up a savings account to cover unexpected expenses, emergencies, or loss of income?
- Prior to a financial challenge such as a loss of income or medical problem, did you save 3-6 months of living expenses?
- Did you have adequate health insurance to cover a medical problem?
- Did you have other insurance to protect yourself properly? (disability, life, etc.)
- Was your “Thin Red Line” too debt heavy? Did you overextend on a major purchase such as a house and/or car?
- Were your spending percentages too heavy in one area (such as housing)? Did that not leave you with enough money to cover your other expenses and/or save?
- Were you actively involved in your finances? Did you have a “worry about it later” mindset or did you let someone else take care of it?
- Were you following a carefully worked out budget?
I have assessed my situation and am committed to changing my financial habits. What should I focus on doing today and in the future to stay on track?
In addition to assessing your past, it is important to make sure you are assessing your current finances with realism and good judgment. Think about your debt and assets. Create a budget and stick to it. Analyze your budget and make sure your spending percentages on different categories of expense are wise. Is one of your high spending budget categories stealing from another important category? The answer is in your budget. You now have a financial framework. Next, you should focus on making financial goals and a plan to reach them. This will help you make good decisions. Don’t forget to include the basics, such as getting on a budget and sticking to it, in your financial goals.