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Business & Commercial Dispute Resolution Document & Notarial Employment Law Family & Personal Immigration & International Real Estate & Property Find an ExpertIf debts have become unmanageable, a bankruptcy lawyer can explain every option, from negotiating with creditors to formal bankruptcy, and protect what matters most to you, such as your home and car. Free debt advice is also available, and is worth getting first.
Chapter 7 is a "liquidation" bankruptcy. Non-exempt assets may be sold to pay creditors and most remaining unsecured debts, such as credit cards and medical bills, are wiped out, usually within a few months. You have to pass a means test based on your income.
Chapter 13 is a repayment plan over three to five years. You keep your property, including a home facing foreclosure, while you pay back part of your debts under court supervision. Businesses have other options, such as Chapter 11.
Some debts generally cannot be wiped out, such as most student loans, child support and recent taxes. A bankruptcy attorney will check which debts and assets are affected and which exemptions protect your property in your state.
In England and Wales the main options are bankruptcy, an Individual Voluntary Arrangement (IVA), which is a formal repayment deal with creditors, and a Debt Relief Order (DRO) for people with low income and few assets. Informal debt management plans are another option. Scotland has its own system.
Free, independent debt advice is available from charities such as StepChange, National Debtline and Citizens Advice, and is a good first step. A solicitor becomes important if you own a home, run a business, have been threatened with legal action, or are a director of a struggling company.
In the USA, consumer bankruptcy lawyers usually charge a flat fee, with Chapter 13 fees often partly paid through the repayment plan. Court filing fees are extra. Many offer a free first consultation. In the UK, insolvency practitioners handle IVAs and are paid from the arrangement, while solicitors usually charge fixed fees for advice.
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Not necessarily. In the USA, homestead exemptions protect some or all of your home equity depending on the state, and Chapter 13 can help you keep a home facing foreclosure. In the UK, your home can be at risk in bankruptcy if there is equity in it, which is why other options like an IVA may suit homeowners better.
In the USA, a Chapter 7 bankruptcy can stay on your report for up to 10 years and Chapter 13 for up to 7. In the UK, bankruptcy, IVAs and DROs usually stay on your credit file for six years.
It is possible, but risky. Mistakes on the forms can mean losing property you could have kept, debts not being discharged, or the case being dismissed. Many lawyers offer a free consultation to see whether you need one.
It varies by country, but usually includes child support and alimony, most student loans, court fines, and debts from fraud. Some taxes are also excluded.
Yes. In the UK, StepChange, National Debtline and Citizens Advice give free debt advice. In the USA, nonprofit credit counseling agencies can help, and a credit counseling course is required before filing for bankruptcy.
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