When you are trying to make payroll and keep the lights on, bankruptcy is, for most owners, always the last thing on their mind. Filing for bankruptcy is a decision no one takes lightly. Before you declare bankruptcy, you will want to ensure that it is the best course of action. Sitting down with a business bankruptcy lawyer in Denver early in the process, before you have made up your mind, is the best way to get the facts you need to make an informed decision, and it can spare you mistakes and headaches down the road. Reputable bankruptcy lawyers will not flinch from your questions. At Delancey Street we talk to a lot of owners under debt pressure, and these are the eight questions we would bring to that first meeting.
Questions to Ask
The first question is the obvious one: do I have a viable alternative to filing for bankruptcy? You want to know whether filing should be the next step or if another outcome is more appropriate. Ideally, the lawyer will go through the other available options with you, and in doing so get a real look at your finances and how deep the trouble goes. However, if the lawyer says “no” to your question outright and then immediately attempts to sell you on their services, they are probably a mercenary who is trying to sell you on their service without thinking about whether or not it’s your best option.
The second question follows from the first: if the answer is bankruptcy, why won’t the alternatives work? Just because someone says yes to bankruptcy doesn’t make them a bad lawyer. What matters is that you understand why you need to file bankruptcy and why the alternatives won’t work. The attorney should take the time to explain alternatives to you and why they are not best options for you.
Third, ask what pros and cons you should prepare for. Few bankruptcy cases come with no downside at all. To assess whether a business bankruptcy makes sense for you, you have to know what drawbacks you should brace yourself for. A good lawyer will openly disclose the “gotchas” associated with the case and help you prepare for the negatives that will result from your case so you can make an informed decision about how to proceed. “Worst case scenarios” are hard to hear, but that’s what a good bankruptcy lawyer is supposed to tell you. How the lawyer responds to this kind of bad news is a good indicator of how they will handle the tough parts of your case later.
Fourth, ask what portion of their practice is dedicated to bankruptcy. Here is the truth, all lawyers aren’t the same. Some business bankruptcy lawyers spend the majority of their time on something other than bankruptcy. Given how specialized bankruptcy is, it’s not wise to choose a lawyer with a low percentage of bankruptcy work. If the lawyer primarily handles bankruptcy cases, that’s a plus. It means that they are practicing in their “zone” and are probably familiar with all the details of the bankruptcy process.
Fifth, ask how many cases the lawyer has handled, and whether they have any litigation experience related to your type of case. This part of the conversation may be brief. Asking how many bankruptcy cases the lawyer has handled in the past gives you a good look into whether they have experience with cases similar to your situation. The issue is, does the lawyer have experience with cases like mine?
Sixth, ask about their track record in similar cases. The obvious questions to ask about a lawyer’s experience include how many times they’ve handled similar cases and how those cases came out. The more experience the better. Ask them about other clients with similar issues, and what the outcome of their case was. More information about successful client outcomes is preferable.
Seventh, ask which type of bankruptcy you should file. You have probably heard of Chapter 7 and Chapter 13. You likely do not have the background to know what the difference between those two types of bankruptcy is and what kind of bankruptcy fits your situation. You must be sure that you file the correct type of bankruptcy. It helps to know whether you are eligible for Chapter 7. To qualify for Chapter 7, you must pass the means test (which requires your monthly income not exceed the median for your state). If you do not pass (or you would rather not liquidate), you should consider filing Chapter 13.
Eighth, ask what separates them from the other business bankruptcy lawyers in Denver. It might make your lawyer squirm, but that doesn’t mean it’s not a valid question. Ask them why they believe they are better than the competition. This can help you decide which lawyer is the best fit for you. Make sure the lawyer’s answer is a legitimate justification, not an empty sales pitch. Remember, this is a partnership, but you still want the best of the best, so do not be shy about pressing for a real answer.
Weigh Your Options Carefully
So don’t go into these meetings with a pre-conceived idea about the kind of bankruptcy case you want, and let the lawyer tell you if there is a legitimate alternative. Ask questions, practice good listening, and give yourself time to weigh your options carefully. Make the best decision you can, but don’t put it off.
Business Debt Settlement Company
If you are an owner carrying merchant cash advance debt, it is worth knowing that bankruptcy is not the only option. Keep in mind, though, that not every firm out there can negotiate down your debt. Delancey Street is not a law firm, but a business debt settlement company. We negotiate with merchant cash advance funders, lenders, and other business creditors on your behalf for less than the amount owed. We don’t give you another loan. If a case isn’t winnable, or it makes more sense for the business owner to declare bankruptcy, Delancey Street will tell you that straight away on the first call and refer you to a trusted, independent bankruptcy lawyer. The initial consultation is free and confidential. That call is one more way to find out whether you really have a viable alternative before you file.
