If debt has pushed your Miami business to the wall, bankruptcy may be on the table. Every business is a unique entity, and your bankruptcy legal needs will be unique to the business. So before you hire a lawyer to file anything, you first need to analyze whether bankruptcy is really your best option. At Delancey Street we’re a business debt settlement company, not a law firm, and these are the questions we tell owners to put to an attorney. The answers vary from case to case, so don’t rely on an Internet search or an AI model for them. Ask your bankruptcy lawyer.
The first question you should ask your bankruptcy lawyer is whether it’s better to file bankruptcy or to adjust the debt. At your first meeting, make sure to confirm that the lawyer has analyzed other options for your business and has given you an honest assessment of the viability of bankruptcy. Every situation is different, and you need to know that your lawyer has thoroughly explored every possible angle to find the most suitable solution for your business. A good lawyer will present you with other options, not just bankruptcy.
Second, ask what the attorney needs from you. Always bring your lawyer relevant documents on the first meeting. Include the documents related to your debts, assets, income, taxes and future goals. This helps an experienced attorney make decisions on the future of your case. The lawyer will ask you questions based on that data, but if you don’t have it, they can’t help you. And any decision to file needs to take into account the present and the future. What do you have right now, and what do you want to do in the future? Unless your lawyer knows your whole financial and legal story, it is impossible for them to know if a bankruptcy filing is the right answer.
Third, ask about debt consolidation or a settlement with your creditors before diving into the process. Don’t be afraid to ask if this might work for your situation. A reputable attorney will counsel you on all available alternatives and assist you in making an informed decision about the best course of action for your business. Your lawyer should carefully weigh the pros and cons of each and help you understand which option is right for you. Settlement is our side of the table. We negotiate with merchant cash advance funders and lenders for less than the full balance owed, and when bankruptcy is the better path, we say so and refer owners to independent counsel.
Fee Structure
Fourth, ask how much the battle is going to cost. Bankruptcy fees are not set by government, and therefore vary from case to case. The answer will vary based on the lawyer, the complexity of the case and its value. Sometimes, the lawyer may be willing to work for a set, “project” fee, or a portion of the total legal fee as the case moves along. The fact is that different attorneys will provide different services at different prices.
Fifth, ask for the standard fee structure in writing. Find out what your lawyer’s fee structure is before you sign a contract. Have them itemize in the contract the various additional charges they will pass on to you for certain matters. Naturally you’ll lean toward the pocket-friendly option, but you want to make sure you have an understanding of what services you will be offered at what cost. Start with the upfront payment and ongoing payments due, and ask about any additional expenses and fees along the way. And ask other clients about their experience. A written fee agreement helps protect you and the lawyer from future misunderstandings. We hold ourselves to the same rule: our fee is one percentage of the total enrolled debt, quoted in writing before any work begins.
How the Filing Affects Your Home, Car and Any Other Assets
Sixth, ask whether your house, your car and your other assets are safe. You need to know how the filing affects your home, car and any other assets you own. There are different types of bankruptcies for business, and each treats assets in its own way. You’ll want to ask whether you’re going to lose any of those assets as a result of the bankruptcy, and which chapter best protects your interests.
Seventh, ask whether Chapter 7 or Chapter 13 fits you better. Chapter 7 can protect your car, house, and assets up to a certain value. Under Chapter 13, you’ll need to come up with a repayment plan over three to five years, and it may offer a stronger shield for your future goals. Know what each means, and ask which makes the most sense. The attorney should assess your options and make a recommendation based on the particular circumstances. Before that conversation, ask yourself: What do you want and what are you willing to give up?
An Understanding of the Consequences
Eighth, ask about the consequences of filing, including the worst-case scenario. Put it on the table and hear it all. How will it impact you in the short-term and long-term? Will it affect your credit? Debt relief through bankruptcy can save you from your creditors, but the resulting poor credit score can block future funding. Once the score comes off your credit history, you can start to rebuild. Be sure to ask about how long the bankruptcy will stay on your credit report. When you ask the worst that can happen, you also ask what can be done to prevent it. An experienced team of bankruptcy lawyers can change the game. Having an understanding of the consequences can help you make an informed decision about the best course of action for your business.
Whoever you end up hiring, be completely honest with them. If there’s a story your lawyer doesn’t know, tell them. The only way a lawyer can give you a good answer is if they know the whole story. If you hide something from your lawyer, the case can blow up in your face. Bankruptcy is not a simple exit strategy. Your attorney should be open about everything - every cost and every risk. Never sign something that you don’t understand. It’s your business, and it’s worth asking the right questions before you file. If you’d like to know whether a settlement could work first, our first consultation is free and confidential.
