It’s no secret that no one wants to have to file for bankruptcy. But unfortunately, it’s a step that millions of people have to take when they find themselves in debt. Of course, there are alternatives, such as clawing your way out of debt yourself, or filing a Consumer Proposal, but many look into bankruptcy initially as a way of regaining their financial stability and starting afresh.
What Types of Bankruptcy Filings are There?
Bankruptcy filings take all kinds of forms. Falling under a variety of chapters within the Bankruptcy Code, it’s a good idea to have an understanding of the different types if you’re in this situation. Typically, they will be broken down into the following chapters:
- Chapter 7 – this involves the process of liquifying your high-ticket assets (such as your home or vehicle). Disposing of any unsecured debts you have, you’ll in return have to give your assets as a method of payment to your creditors.
- Chapter 11 – more suitable for businesses, it involves creating a budget and financial goals to make the business profitable again. This could involve cutting overspending.
- Chapter 13 – suited to high-net-worth individuals or those who don’t fall under the bracket of chapter 7, this allows individuals and businesses to create a debt repayment plan over the course of several years.
Of course, this isn’t a complete list. So if you don’t fall under these brackets with a combination of your own comprehensive research and professional guidance you’ll be able to identify the type that’s suitable and the steps to take.
A Bankruptcy Trustee
If you’ve passed the stage that you can avoid it, then you might need to seek a bankruptcy trustee to help guide you in the right direction. Experts in their field, they are appointed by the Department of Justice in this country to represent your bankruptcy proceeding and help you to create a path for a better financial future.
Evaluating your unique financial situation, they will create an affordable repayment plan to help repay the debt that you owe to your creditors. Although many are worried that filing for bankruptcy can make a significant dent in your credit report, if you have successfully eliminated the debt over the agreed time then it shows future lenders that you’ve taken the steps to rebuild your finances and credit.
So How Do You Go About Choosing a Bankruptcy Trustee?
Your selection process for choosing a bankruptcy trustee can begin by researching which ones are out there. Luckily, there are plenty of sites that you can use to find professionals in your area that can help with your situation. The selection process will, however, depend on a variety of factors. Including the following:
1) Their Experience
When considering which bankruptcy trustee you should choose, pay attention to what experience they have in the field.
- how long they have been working for,
- the types of cases they’ve taken on, and
- their success rate.
Something that can be identified both before your initial consultation and during, it’s key to understanding which professional will be most suitable to help you with your case.
In addition to asking them, you could also read reviews left by previous clients that have worked with them. This will give you an insight into their understanding, empathy and their professionalism. Quality is essential when finding the best bankruptcy trustee, so keep this at the forefront of your research from the get-go.
2) Arranging a Consultation
Following on from the above, in your selection process, it’s a good idea to arrange a consultation with them. This is not only to ensure that they have the skills to be able to help you effectively but to guarantee that they are a good fit in terms of personality.
You need to feel comfortable when working with your bankruptcy trustee since they will be looking at your finances and offering you expert advice. If you don’t feel comfortable with them and your personalities clash, then you simply won’t have the best experience and their guidance might not be as useful.
Typically, you can call the trustee first to discuss exactly what assistance you need, before meeting them formally to go through your finances. This initial consultation is invaluable in giving you a feel as to what the process will be like and what you’ll get from the trustee.
3) Are They Licensed?
To work as a bankruptcy trustee not only do they need to be qualified so that they can offer you accurate expert advice, but they also need to be licensed. At the start of the process, you should therefore, confirm with the trustee that they are legitimate and following the best legal practices.
Don’t get drawn into a trustee’s services because of the cheap prices if they are licensed. You want a reliable and trustworthy trustee to assist you with your financial situation.
4) The Cost
Although the initial consultation with the trustee tends to be free, you’ll need to consider how much their overall services cost if you agree to use them. This can vary depending on the business they are employed in, their experience, the average cost for their services in that location, etc. But by identifying this at the start of the process you’ll get a better idea of whether you’ll be able to pay for them.
A way of comparing and contrasting a handful of potential trustees, you can see how their service costs align with the guidance they are offering you.
5) What They’ll Do After Your Debts are Discharged
Once your debts are discharged you’ll be one step closer to a brighter financial future. However, in order to be successful with this, you’ll still need some guidance from your bankruptcy trustee to ensure that you get back on track.
When looking at different bankruptcy trustees you should therefore ask them what they can do for you at this stage. Usually, they will offer one or two credit counselling sessions to guarantee that you’re on the path to success, as well as providing you with additional resources.
If you ask them this in your consultation and they don’t say anything, then they might not be the right bankruptcy trustee for you. Whereas if they promise to help you to rebuild your credit, then they may be suitable and worth the cost.
What Happens After Bankruptcy?
As part of the guidance mentioned above, your bankruptcy trustee should discuss this with you. But to give you a flavor, here are some of the things that will happen once you’re discharged from your debts.
Once you’ve repaid all that you owe to your creditors, you’ll no longer legally have to pay anymore. To ensure that this happens, a discharge order is given to your creditors. You need to keep in mind that although a large part of your debt is repaid, not all debts can be discharged. This might include debts that are owed to the government or tax claims.
A creditor can also disagree with the petition for a discharge. Similarly to when creditors vote against you filing for a Consumer Proposal, if they do this, then a lien may be enforced. They will typically do this if they believe that all the debts that you owe them haven’t been successfully repaid.
Choosing a Bankruptcy Trustee: Final Thoughts
So, there you go! Those are 5 factors that you should consider when choosing a bankruptcy trustee. Of course, the trustee that you choose is completely up to you. But the moment you hire a professional, qualified and experienced trustee you’ll find that your financial future is starting to brighten up.
Are you ready to start choosing a bankruptcy trustee? Best of luck to you!
AUTHOR LaTia Longuemire
My name is LaTia Longuemire. I enjoy writing, singing, and cooking in my spare time. My passion is helping others. At this stage in my lifetime, I'm primarily focused on my children. They are everything that keeps my world spinning.