The Pros and Cons of Filing Bankruptcy - Generally If I File Bankruptcy Will I Lose Everything?

The question that most people ask the bankruptcy attorney when they first walk into any office is, "If I file bankruptcy will I lose everything?"The reason why many people feel this way is because debt collectors spend a lot of time threatening people with scare tactics of what will happen if they use the bankruptcy filing to wipe out their debt. Obviously, it should be working because many people avoid filing bankruptcy without exceptions because they think that they will not be able to own anything or get credit anymore.

The truth is, debt collectors know that the automatic stays put in place once the bankruptcy petition is filed and they will not even be able to contact the debtor. Should they do, they will be in violation of the automated stay and could have sanctions brought up against them from the bankruptcy court. For your ones that continue to be persistent, the debtor can actually get damages and hips for their bankruptcy lawyer because of the flagrant violation.

Filing Chapter 7 bankruptcy was designed to eliminate a great deal of unsecured debt and allow the debtor to acquire a fresh start. Because of this, Congress added generous bankruptcy exemptions to the bankruptcy code allowing an individual to keep a fair amount of their personal property. Filing bankruptcy is really a federal court procedure but the states have their own laws to be effective in conjunction with federal law. Every state may have their own set of bankruptcy exemptions to guard one's property from the creditors. When someone has to file bankruptcy they can use either the federal exemption laws or the laws with the state in which they are filing. Most people will use his state bankruptcy exemptions because they're more tailored for the area where someone resides. For example, within the corn belt they might have an exemption to protect a farmer's tractor to make it exempt no matter what the value of the property. These were written knowing that the farmer would be out of business and not be able to get another chance if the tools of his trade were taken away.

In today's economy, rarely does anyone filing Chapter 7 bankruptcy bankruptcy lose any property. The bankruptcy trustee is actually looking for easily liquidated items or cash. The trustee will always weigh the cost of collecting an item and selling it versus the reward. Nowadays, the need for property has decreased significantly rendering it harder to liquidate most property. If someone had a car with a blue book value of $8000 and only $5000 was protected by bankruptcy exemption laws, the bankruptcy trustee may not be interested in liquidating it because if they seized the house and sold it for $6000, it wouldn't be worth their cost and time spent for liquidating property.

This yet again gives fuel for the notion of having a bankruptcy lawyer represent the debtor. A seasoned bankruptcy lawyer will know exactly what bankruptcy exemption laws use and will also know what is expected of the bankruptcy trustee to get a successful bankruptcy discharge. It's difficult to put a value on that knowledge an attorney will receive from their experience. Before you decide to believe something that someone tells you, a person should consider the source and talk with an expert to learn what its real and what's not.


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