Bankruptcy is designed to give the honest debtor a fresh start in their financial life when they have no other options to deal with their debt. In most cases, bankruptcy can accomplish this in one form or another, or through one chapter of bankruptcy or another. I like to call this “Track One” of bankruptcy, thinking of bankruptcy as a set of railroad tracks, discharging or eliminating debt.
“Track Two”, as I call it, of bankruptcy is as equally important as Track One. Track Two involves making sure, as best as possible, that the honest debtor will not lose any property that she does not want to lose by the bankruptcy trustee selling that property. The analysis that a bankruptcy attorney goes through to try to prevent this from happening is very complicated and complex, but involves the client sharing all accurate information to the attorney. It will be important for the client to provide all documents that show ownership of property (deeds, titles, etc.) and all documents that show liens on property (mortgages, liens on titles, promissory notes etc.) and any other documents their lawyer requests. The client must work with the attorney on providing, as best they are able, the current fair market values of property. Sometimes it may be important for the client to employ an expert appraiser to assist with that value. The attorney for the client can oftentimes provide names of qualified appraisers to do this work.
Sounds like a lot of work to just “get out of debt” ? Yes, it can often take some time for the attorney and the debtor, but the time and effort put in can often pay rewards to the debtor by having the knowledge that their property is protected from the trustee by liens or exemptions (more on exemptions in other posts), or if the property is not protected, possibly making the decision not to file the bankruptcy.