Understanding the limitations of hiring a business bankruptcy lawyer.
There’s a lot of misinformation about what a business bankruptcy lawyer actually does. Between poor media reporting, and a general lack of popular legal knowledge, it can be hard for business clients to know what to expect when they begin the process.
Will all your debt be erased? Can you give preference to certain creditors over others? Can a bankruptcy lawyer help you hide money and assets, protecting you from the court’s orders?
These are just a few of the things a business bankruptcy lawyer can’t (and won’t) promise to do.
- A business bankruptcy lawyer won’t magically erase all of your debt. This includes debts for taxes owed, credit and other services obtained under fraudulent circumstances, spousal/alimony/child support, death and personal injury debts caused by the debtor’s actions, and any debts incurred after filing for bankruptcy. While there are some other limitations based on the different chapters of bankruptcy, these are the most common debts you will still be required to pay back.
- Your bankruptcy attorney won’t help you give special treatment to certain creditors. Generally speaking, the fair treatment of all creditors is a top priority. If you transferred any business property, assets, or funds to a specific creditor 90 days before filing for bankruptcy, the court can go back and reclaim those funds. And if you think you can dodge it by paying family back first, think again. Transfers to relatives and friends can be reclaimed for as far back as a year. It’s not a good idea, and lying about it will only bring you perjury charges.
- Your attorney absolutely won’t help you hide assets from the court. If you think it’s a good idea to empty all your accounts and bury the money in your back yard, you’re just flat out wrong. Regardless of where the money sits, it is still your property. You are legally obligated to disclose it to the court; if you don’t, then you’re again facing perjury charges. This obligation also includes the transfer of property. Any transfers made within four years of filing, which don’t receive an equivalent amount of value in return, will be voided and returned to the trust or estate.
So, What Will Business Bankruptcy Lawyers Actually Do?
For starters, they’ll help you navigate the various filing options and legalities of the court. Bankruptcy laws are quite complicated, so knowing the processes, procedures, filing time frames, and more are all matters a professional should handle.
They can also buy you relief from harassing creditors. Once you hire a bankruptcy attorney, debt collectors can no longer contact you. To do so would be a violation of the Fair Debt Collection Practices Act.