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The Decision to Use Bankruptcy - Tread Lightly

It is important for a person with serious debt problems to understand that the choice to file for bankruptcy and the choice of bankruptcy chapter are personal. The choice to avoid bankruptcy and try to deal with debt directly is as well.

Except in the simplest of matters, that personal decision should only be made with the guidance of an experienced bankruptcy attorney.

The question is when should these decisions be made, after a short meeting with the attorney or after a more thorough analysis is complete?

I think that many debtors are under the impression that a simple one-hour consultation with an attorney (or often non-attorney) is enough to allow them to make these decisions.

In fact, many calls to my office start with something like, “I spoke to an attorney (friend, paralegal etc.) and I am ready to file a chapter 7 bankruptcy”. My initial thought is usually, “how are you so sure”?

At most, a short consultation can provide the debtor with the sense that bankruptcy may end up being the only option in the long run. It may also provide some detailed information about how bankruptcy works and what problems may be encountered by the debtor.

However, the planning involved to prepare and file a well done bankruptcy case, the final decision as to which chapter makes the most sense, and the verification that there is not some better non-bankruptcy alternative, cannot be made without a thorough review of hundreds of facts, timing issues, and potential changes.

This analysis is often made more complicated by the inability of the debtor to provide complete information at the initial consultation and during the analysis process, changes in the debtor’s situation, and changes in the law.

I suggest that my clients, even in “simpler situations” hold off on their decision making until a complete review of all their information is complete and a second “analysis” meeting is final.
This way the “stones” are all turned over before decision making is done.

I find that this creates less surprise and a well planned case.

You should wait as well for your attorney to finalize his or her analysis before setting your heart on a solution. Even if you are “sure” that you are a chapter 7 candidate.