Bankruptcy is an option for getting out of debt offered to citizens of the United States who are faced with a serious financial crisis. Although both Chapter 7 and Chapter 13 bankruptcy can be extremely beneficial, there are some negative aspects of this solution as well. Unfortunately, due to the high amount of fraud over the years that consisted of people filing and being approved for bankruptcy that should not have qualified, this government program for eliminating debt has been plagued by exaggerated horror stories.

We want to address a few downsides associated with filing for personal and business financial protection, followed by focusing on the top reasons why it makes perfect sense. One concern, when filing for Chapter 7 bankruptcy, the negative record of having gone through this process would remain on your credit report for seven years and when filing for Chapter 13, it would take ten years for it to be removed from the report. From a seller’s perspective, this reduces your creditworthiness and puts you in a high risk category.

Another downside to bankruptcy is the financial investment. For instance, you would be required to pay a filing fee, any cost connected with credit counseling, which is now mandatory under the new “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005″, and any attorney fees if legal assistance for any part of the bankruptcy filing was needed. Depending on the type of bankruptcy and severity of debt, the total would run anywhere from $350 to $800. Although a few other things would be considered negative, these two are the main issues.

Filing for bankruptcy also offers a number of benefits, which is the reason people go through this process in the first place. If you are in a situation whereby you cannot meet your financial obligations, regardless of the reason why, based on a specific formula used for qualification, a credit counselor or bankruptcy attorney could tell you if you are a good candidate under the new 2005 bankruptcy laws. If you were, bankruptcy protection would provide the opportunity for a fresh start.

Additionally, even though the bankruptcy would stay on your credit report for up to ten years, often when creditors see that a person has had debt discharged through a bankruptcy, they are actually more willing to extend credit than prior to filing. The reason is that creditors know legally, the individual would not be able to file for bankruptcy again for a long time. Therefore, you could expect to receive several credit offers, especially from credit card companies. This would help in rebuilding credit but more than ever before, it would be critical that you be careful to avoid ending up in another financial mess.

Then as mentioned, another positive aspect of filing for personal and business bankruptcy protection is getting out of debt. Even if you were required to pay some creditors, the level of stress relief is tremendous. When people are constantly stressed with debt, marriages suffer, job quality and production is affected, health problems can arise, and everything in life becomes more serious and hopeless. Being able to get out from under this debt is not a miracle cure but it certainly changes the dynamics of everyday life for the better.

Prior to 2005, filing for bankruptcy was a much easier process. In fact, for people with less complicated cases, “bankruptcy kits” could be downloaded from online and handled by the person without assistance of an attorney. Unfortunately, because criteria for qualification and control over cases being pushed through was so lax, fraud became a serious problem. Fraud grew to such great proportions that the United States Government realized something drastic had to occur to stop or at least reduce the problem.

In 2005, the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005″ was passed by Congress, being one of the largest laws enacted specific to finance. The rules established within this Act are somewhat complex and for people to qualify for bankruptcy, whether Chapter 7 or Chapter 13, going through the process now requires the services of an attorney who specializes in this area. To be successful with the bankruptcy filing but also to avoid common but also costly mistakes, it is essential to work with the right attorney but most people have no clue what to look for or the questions to ask.

We wanted to provide a few helpful tips for hiring a bankruptcy attorney to ensure the person is right for the person and the type of filing. Most attorneys that advertise bankruptcy assistance do in fact have the required skill, knowledge, and training to be beneficial to the client but unfortunately, some attorneys have seen the vast number of consumers now filing as an opportunity to charge outrageous fees or advertise they have the appropriate expertise but without ever having filed a case.

Therefore, someone needing this type of legal assistance should never assume anything but take time to research various attorneys before signing a legal contract. With the following tips, the pain of bankruptcy could be lessened.

•    Experience – Any attorney being considered to assist with a bankruptcy case should have at minimum five years experience practicing law in this venue. Although the new laws are now understood, bankruptcy laws are still modified and changed so the attorney should be up-to-date on all current laws to include exemptions, the court system, and trustees.

•    Credentials – In addition to having the necessary experience, a good bankruptcy attorney should be able to present credentials of good standing. Typically, credentials are seen on the walls in an attorney’s office to include a license from passing the state bar, a certificate from the American Bankruptcy Institution and/or a certificate showing the attorney to be a member of NACBA, or National Association of Consumer Bankruptcy Attorneys. Of the various credentials, the license and certificate from NACBA are the most important, providing peace of mind to the person filing that the attorney is current on all laws pertaining to bankruptcy.

•    Law Firm – Although a good bankruptcy attorney may work as a standalone lawyer, most are associated with law firms. When associated with a law firm, it is common practice for a paralegal and/or junior attorney to do a significant portion of the work of paying clients. Therefore, when researching possibilities for bankruptcy attorneys that work in a law firm, not only should the attorney be considered, but the firm as a whole.

•    Current Case Load – The best bankruptcy attorneys typically have the heaviest case loads but even so, it would be important to understand ahead of time just how heavy of a load a specific attorney is carrying. Of course, if an attorney has a huge number of current clients, more than likely a new bankruptcy case is not going to take priority or there would be risk of the case not getting the attention it deserves.

•    Convenience – Finally, even the busiest and most sought after bankruptcy attorney should be available to the client. Yes, there will be many times when the attorney is in court, travel, or in consultation with another client but the attorney should make time to address all client’s needs and questions or at least have a qualified representative talk to the client on his behalf.