When the debt amount surpasses the cash flow, a person has to file for bankruptcy. Personal bankruptcy does not mean the end of the world; you can still get out of it safely if you hire a good lawyer.
However, the most challenging part is realizing the appropriate time to proceed with the bankruptcy filing. Usually, when people have a deal lined up in their business, they refrain from going public with their insolvency, which leads to bigger issues.
Institutional creditors are strict with their timeline, so if you fail to hire a lawyer to represent you, you may end up in deep trouble. Another aspect of this problem is hiring a good insolvency lawyer.
The question arises on how to judge that a lawyer is good enough to make your case. Primarily, ensure that the lawyer you are approaching has a good amount of relevant experience under his belt. Experienced lawyers will give you the best advice because they have handled hundreds of similar cases.
Next, see if the lawyer sits down with you to evaluate your situation and put up estimated costs. Lastly, the lawyer must have a close working aide to assist you with the case and update you on the events.
Now, coming back to the problem of judging the right time to hire an insolvency lawyer and file for bankruptcy. In this article, we will elaborate further on the reasons for hiring an insolvency lawyer.
Pile of debt
If you ever feel that your debt keeps on increasing and you are stuck in an infinite loop of default payments, sit down and pull out all your financial documents. Next, calculate all the debts, including the interest payable on them.
Now, take note of your asset cover to prepare for the worst-case scenario. If you have luxury items that are not necessary, try to put them on sale to recover some of the debt amounts.
However, if the pile of debt seems crushing, and you don’t seem to find any way to get out of it, hire an insolvency lawyer.
An experienced insolvency lawyer will assess your situation and take complete charge. He will calculate your finances in accordance with the income sources. Additionally, he will also calculate all the hidden charges and penalties along with your sustainability.
Next, these lawyers have a good working relationship with institutional creditors and other financial creditors. He can set up a meeting with all the creditors or their representatives to come up with an amicable solution.
The insolvency lawyer will help come up with a loan restructuring agreement to find you an easy way to get out of the debt. This will help you avoid all the complex legal processes and save you long-term litigation costs.
You are being sued
If you are past the first stage of your insolvency, where you couldn’t reach a restructuring deal with the creditors, you will be sued by your creditors. The creditors have to follow a certain procedure before taking you to court.
The procedure involves effective communication via legal notices and electronic means. The creditor must have sufficient proof to show that he has exhausted all the means to reach you regarding credit, so they are now approaching the court.
This could either mean that you conveniently avoided all the notices, or you were never served but dragged directly to the court. In any case, you will need a competent insolvency lawyer. An insolvency lawyer will make your case in front of the court and try to find a middle ground.
Additionally, if things go out of hand, an insolvency lawyer is crucial to saving you from prison time. Moreover, there are a lot of legal complexities involved in the insolvency process that you may not understand. Judicial orders and interpretations involve a lot of complex legal terms that you may not understand, so it is best to hire an insolvency lawyer.
You are considering bankruptcy
There is a thin line between insolvency and bankruptcy. Insolvency is a legal proceeding that involves claims from debtors and creditors. All the claims are filed through Chapter 7 and Chapter 13 forms.
This is where all the parties provide a history of debt and details of loans with interest rates and penalties. The court then adjudges the situation of the debtor by taking into account all the assets and cash in the bank and accordingly suggests a recovery mechanism acceptable to all the parties.
The only similarity between insolvency and bankruptcy is the cause. Both these situations arise due to crushing debt. However, when a person is stuck under a pile of debt where there is no way of getting out, he considers filing for bankruptcy.
Bankruptcy is the voluntary filing of an insolvency application in court. When you decide to go into liquidation to pay off all your debts, you can consider bankruptcy. In any case, you will need the assistance of insolvency lawyers to take you through the complex legal procedures.