When your business is falling behind, there are a million things running through your head: payroll, rent, keeping the lights on. Actually filing for bankruptcy is probably the last thing on your mind. However, if your business is on the brink, seeking legal counsel from a bankruptcy lawyer is a crucial first step. Talking to one early can save you from mistakes and headaches later. You have a lot riding on this and you want to do everything you can to make the process as smooth as possible. Before you make the decision to file, it’s important to have all your questions answered.
We are Delancey Street, a business debt settlement company, not a law firm. Settlement is not always the answer, and when bankruptcy is the better path, we say so and route owners to bankruptcy counsel. We want to help business owners to make the right decision when the time is right, not just get them to choose settlement so we can work with them. If you have a consultation booked in Cincinnati, here are eight questions you should ask a bankruptcy lawyer before you file.
A Viable Alternative to Filing
The first is whether you have a viable alternative to filing. After all, you don’t want to jump into bankruptcy when it’s not even the best choice. The way a lawyer answers shows you whether they will look for the best option for your situation, or if they’re trying to just get you to file. A lawyer who digs into all your options first is more likely to be a good colleague later. Asking also gives them a reason to dig into your finances and see how deep the trouble goes. For some owners, another way to resolve your business debts is by negotiating directly with your creditors without any court involvement. These are all valid points to discuss with your lawyer.
Second, if the answer is that you need to file, ask why the alternatives won’t work. In most cases, if you are already sitting across the desk from a bankruptcy lawyer, odds are you will need to file, and the reality is that sometimes there is just not an alternative. If your attorney suggests some alternatives and says those have been tried and failed, or won’t work, just ask them why. If a lawyer is recommending an action and can provide reasons why that action makes sense, that lawyer is likely a good lawyer, even if their recommendation is contrary to your wishes. The better the bankruptcy lawyer answers, the more you are going to gain a feeling of comfort.
Third, ask what pros and cons you should prepare for. There are both pros and cons associated with bankruptcy. Still, you can prepare yourself for the key implications and consequences, regardless of your specific facts. Maybe you have assets that need protecting, or you are struggling to find the money for a Chapter 13. Either way, discuss every foreseeable issue early, so you can reduce the uncertainty by walking through these tough decisions with your lawyer. Then you can move forward with confidence.
Fourth, ask the lawyer: How will you manage the negative aspects of my case? A good lawyer doesn’t sugarcoat things. If the road ahead is going to be tough, they’ll let you know straight up. They should be upfront about what’s going to be hard and what they’ll need from you. This tells you they’re being honest and not just saying whatever they think will sell them the case. Ask how they’ll prepare you for the bumps ahead.
Bankruptcy Expertise
Fifth, ask what portion of their practice is dedicated to bankruptcy. This conversation should be about bankruptcy expertise, not sales pitches, so check for experience. First and foremost, it’s important to find a bankruptcy attorney who specializes in bankruptcy law. You want someone who is well-versed in the process. Bankruptcy should be at least a large part of what the attorney does. The more experience the better - more knowledge to apply to your case.
Sixth, ask how many bankruptcy cases they have handled. This part of the conversation may be brief. You want to see some evidence of expertise in similar situations. Ask, too, whether they have litigation experience related to your type of case. If the answer is “yes”, then don’t stop there. Try and find out a little bit more. A lawyer with experience in your kind of case can help you navigate the process more effectively. You do not want an attorney who says “I have never done one of those cases but we can handle it.” Are you comfortable with their background? If not, it’s probably time to move on.
Seventh, ask which type of bankruptcy you should file. You have probably heard of Chapter 7 and Chapter 13, and your lawyer should explain them to you. In short, to file Chapter 7 you have to pass the means test, meaning your monthly income cannot be greater than your state’s median. Those who don’t pass, or who would rather not liquidate, often choose Chapter 13. During this initial conversation, the lawyer should be attentive to your needs and explain bankruptcy law to you clearly and concisely.
Finally, don’t forget to ask why you should pick that lawyer over all the others. A good, experienced attorney will have plenty of reasons to give you. We’ve found it’s a good idea to press for the unique qualifications they can offer. Each lawyer probably claims to have “what it takes.” This is a partnership, so do not be afraid to ask them what makes them a good partner. Remember, you should feel like you can trust this lawyer with all of the details of your business.
Get Your Questions Answered
A small business owner won’t necessarily know the answers to all of these questions, and that’s okay. That’s where a good bankruptcy attorney comes in. You have to be able to trust the person that you’re entrusting your financial future with. If you can trust them at the worst moment, then it’s likely that you can trust them at any moment. Whether your path ends in a settlement with your creditors or a filing, take this as an opportunity to learn about your options. Take the time to research it, and get your questions answered so you can move on with a positive mindset.
