How Do I Find an Affordable Bankruptcy Attorney? - Upsolve (2024)

FAQs

Is Upsolve legitimate? ›

Upsolve is a non-profit corporation supported by grants from the US Legal Services Corporation, by private donors, and by pro-bono bankruptcy lawyers. The use of the app is completely free. You will still have to pay court fees, though the app can assist you in requesting a waiver.

What Is the Cheapest Type of Bankruptcy? Chapter 7 bankruptcy is generally the cheapest type of bankruptcy to file. Attorney fees for this type of bankruptcy are usually far lower than those for a Chapter 13 bankruptcy.

Most people prefer Chapter 7 bankruptcy because, unlike Chapter 13 bankruptcy, it doesn't require you to repay a portion of your debt to creditors. In Chapter 13 bankruptcy, you must pay your creditors all of your disposable income—the amount remaining after allowed monthly expenses—for three to five years.

The biggest difference between Chapter 7 and Chapter 13 is that Chapter 7 focuses on discharging (getting rid of) unsecured debt such as credit cards, personal loans and medical bills while Chapter 13 allows you to catch up on secured debts like your home or your car while also discharging unsecured debt.

Filing for bankruptcy can cause significant harm to your credit history, however it can be the best solution for managing debt that you can't afford to pay. Consider consulting with a reputable credit counselor to explain all your options for repayment before you file for bankruptcy.

Filing for bankruptcy can negatively impact your immediate financial future. Obtaining credit after filing for bankruptcy could mean increased interest rates. Obtaining credit after filing for bankruptcy might require security deposits.

A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code.

So Who Actually Pays for Bankruptcies? The person who files for bankruptcy is typically the one that pays the court filing fee, which partially funds the court system and related aspects of bankruptcy cases. Individuals who earn less than 150% of the federal poverty guidelines can ask to have the fee waived.

With an attorney, the success rate of a chapter 7 bankruptcy case is over 95%. For Chapter 13, pro se filers do even worse than their Chapter 7 counterparts.

Bankruptcies are considered negative information on your credit report, and can affect how future lenders view you. Seeing a bankruptcy on your credit file may prompt creditors to decline extending you credit or to offer you higher interest rates and less favorable terms if they do decide to give you credit.

What time of year is best to file bankruptcy? ›

The first quarter of the year tends to be a popular time for people to file for bankruptcy. People who choose to file at this time often use their tax refund to pay the legal and court fees necessary to move forward.

A Chapter 11 bankruptcy is a long and costly process, which can be hard for businesses struggling to stay afloat. While it doesn't force them to sell assets, it can cost them plenty in filing fees and legal fees. After their plan is confirmed, they will be paying off their old debts for a number of years.

A Chapter 13 bankruptcy can remain on your credit report for up to 10 years, and you will lose all your credit cards. Bankruptcy also makes it nearly impossible to get a mortgage if you don't already have one.

A Chapter 7 bankruptcy is a type of bankruptcy that can quickly clear away debts. It's also called a liquidation bankruptcy because you will have to sell nonexempt possessions or assets to repay your creditors. Another name for it is a straight bankruptcy because there are no drawn-out repayment plans.

Chapter 7 and Chapter 13 bankruptcy both affect your credit score the same – having a Chapter 13 bankruptcy on your credit report will not be any better for your score than a Chapter 7. However, the individual reviewing your report will look at more than your score.

Types of debt that cannot be discharged in bankruptcy include alimony, child support, and certain unpaid taxes. Other types of debt that cannot be alleviated in bankruptcy include debts for willful and malicious injury to another person or property.

The court may deny a chapter 7 discharge for any of the reasons described in section 727(a) of the Bankruptcy Code, including failure to provide requested tax documents; failure to complete a course on personal financial management; transfer or concealment of property with intent to hinder, delay, or defraud creditors; ...

Don't worry—you won't lose everything in bankruptcy. Most people can keep household furnishings, a retirement account, and some equity in a house and car in bankruptcy. But you might lose unnecessary luxury items, like your fishing boat or a flashy car, or have to pay to keep them.

The main cons to Chapter 7 bankruptcy are that most unsecured debts won't be erased, you may lose nonexempt property, and your credit score will likely take a temporary hit. While a successful bankruptcy filing can give you a fresh start, it's important to do your research before deciding what's right for you.

Chapter 7 Bankruptcy forgives you of most of your debt. You can keep most or all of your assets with a few exceptions. These exceptions depend on federal and state laws. A person called a bankruptcy trustee will be appointed to your Chapter 7 case to oversee the liquidation of your assets.

How can I get out of debt without money? ›

You can get out of debt with no money and bad credit with the help of a debt management program or a loan from a friend or family member. You should also look into getting a debt consolidation loan for bad credit, especially if you have some income despite not having any money saved.

Bankruptcy is your best option for getting rid of debt without paying. Before committing to filing bankruptcy, understand your options and the consequences that come with having a bankruptcy on your credit report.

When an individual files for bankruptcy, they are typically responsible for paying the costs of the bankruptcy process. The cost of filing for bankruptcy can vary depending on several factors, including the type of bankruptcy, the complexity of the case, and the location of the bankruptcy court.

Direct costs include lawyers' and accountants' fees, other professional fees, and the value of the managerial time spent in administering the bankruptcy. Indirect costs include lost sales, lost profits, and possibly the inability of the firm to obtain credit or to issue securities except under especially onerous terms.

Bankruptcies are paid for by the individual who is filing for bankruptcy. Court fees and attorney costs are paid by the filer who is also responsible for all of the non-dischargeable debts that bankruptcy does not clear. Creditors absorb the losses for the discharged debts.

Chapter 11 bankruptcy is also known as “reorganization” or “rehabilitation” bankruptcy. It is the most complex form of bankruptcy and generally the most expensive.

What will my credit score be after bankruptcy? The average credit score after bankruptcy is about 530, based on VantageScore data. In general, bankruptcy can cause a person's credit score to drop between 150 points and 240 points.

Generally, your credit score will be lowered by 100 points or more within two to three months. The average debtor will have a 500 to 550 credit score. It may be lower if the debtor already had a bad score before filing. In summary, your credit score won't be that great after Chapter 7.

Chapter 7 bankruptcy is a legal debt relief tool. If you've fallen on hard times and are struggling to keep up with your debt, filing Chapter 7 can give you a fresh start. For most, this means the bankruptcy discharge wipes out all of their debt.

Job loss, medical expenses, and escalating mortgage payments are among the common reasons people file for bankruptcy. Overspending can also contribute to a situation that forces someone to file for bankruptcy.

What age do most people file bankruptcy? ›

The data indicate that the ages of 25-44 are the peak years for filing bankruptcy. People between the ages of 45 and 59 file at about the rate that would be expected by their proportion in the population at large.

Bankruptcy Filing Demographic Statistics

About 20% of filers are 55 years or older. The median age is about 45. People ages 65 and older make up about 8% of filers. Those ages 34 and younger make up about 19% of filers.

Generally, we recommend stopping any use of credit or loans for at least 90 days before filing for bankruptcy. If you choose not to wait before filing, your creditors may challenge your discharge or worse yet; accuse you of fraud, where you accrued a debt without the intention of repaying.

Chapter 13 Bankruptcy is Bad For Your Finances

Money you had paid in the payment plan suddenly is applied to interest on debts that had been held in abeyance, which means you will owe more than when you started.

Secured creditors like banks are going to get paid first. This is because their credit is secured by assets—typically ones that your business controls. Your plan and the courts may consider how integral the assets are that secure your loans to determine which secured creditors get paid first though.

In Chapter 13 bankruptcy, you're able to keep expensive property like a house or a luxury car so long as you make monthly payments under a three-to-five year repayment plan. But unlike Chapter 7 which results in a discharge of debts in 96% of cases, only about 40% of Chapter 13 cases end in discharge.

A Chapter 13 petition for bankruptcy will likely necessitate a $500 to $600 monthly payment, especially for debtors paying at least one automobile through the payment plan. However, since the bankruptcy court will consider a large number of factors, this estimate could vary greatly.

The Minimum Percentage of Debt Repayments In A Chapter 13 Bankruptcy Is 8 To 10 Percent.

Debts not discharged in chapter 13 include certain long term obligations (such as a home mortgage), debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated ...

What happens if you come into money after filing bankruptcy? ›

Most Assets Acquired After a Chapter 7 Filing Belong to You

The general rule is that anything you earn or acquire after you file for Chapter 7 bankruptcy is yours to keep and doesn't become part of the bankruptcy estate.

Credit card debts are unsecured. This means they qualify for discharge when you file for Chapter 7 bankruptcy. Discharge means that once your case is complete, you'll no longer be legally obligated to pay the debts.

In Chapter 13 bankruptcy, 401(k) or other voluntary retirement contributions reduce the amount creditors receive through your repayment plan, so most jurisdictions don't allow them. Some, however, might approve contributions if you're approaching retirement age and the contributions are reasonable and necessary.

You can typically work to improve your credit score over 12-18 months after bankruptcy. Most people will see some improvement after one year if they take the right steps. You can't remove bankruptcy from your credit report unless it is there in error.

In a Chapter 7 bankruptcy, also known as a liquidation bankruptcy, there is no repayment of debt. Because all your eligible debts are wiped out, Chapter 7 has the most serious effect on your credit, and will remain on your credit report for 10 years from the date it was filed.

Largest bankruptcies

The largest bankruptcy in U.S. history occurred on September 15, 2008, when Lehman Brothers Holdings Inc. filed for Chapter 11 protection with more than $639 billion in assets. Lehman Brothers Holdings, Inc. Worldcom, Inc.

From filing to discharge (wiping out debts), Chapter 7 bankruptcy cases typically take 4-6 months. As far as personal bankruptcies go, Chapter 7 is the fastest. By comparison, Chapter 13 can take up to five years because a repayment plan is involved.

Expect a lower credit score (100 -150 points lower) after Chapter 7. However, you must confirm your score by requesting a free credit report allowed under Federal law.

After your bankruptcy filing falls off your credit report, your FICO score calculation could show a 30-to-100-point increase depending on the other information on your report.

What is the #1 reason for bankruptcies? ›

Job loss, medical expenses, and escalating mortgage payments are among the common reasons people file for bankruptcy. Overspending can also contribute to a situation that forces someone to file for bankruptcy.

The main cons to Chapter 7 bankruptcy are that most unsecured debts won't be erased, you may lose nonexempt property, and your credit score will likely take a temporary hit. While a successful bankruptcy filing can give you a fresh start, it's important to do your research before deciding what's right for you.

A Chapter 7 bankruptcy can take four to six months to do, from the time you file to when you receive a final discharge – meaning you no longer have to repay your debt. Various factors shape how long it takes to complete your bankruptcy case.

More than likely, you would only be dealing with the two most common types of bankruptcies for individuals: Chapter 7 and Chapter 13. (A chapter just refers to the specific section of the U.S. Bankruptcy Code where the law is found.²) But we'll take a look at each type so you're familiar with the options.