Bankruptcy is unfortunately a much more common problem these days, with the recession, unemployment, and failing businesses left and right. Though many people associate bankruptcy with big corporations and the like, the ordinary man on the street may feel the need to engage the services of a bankruptcy attorney sooner than they think.

There are two types of bankruptcy in the US for individuals. The first is Chapter 7, which involves the liquidation of certain key assets and using the proceeds to pay off as much of the debts as possible. The second is Chapter 13, which involves a repayment scheme mandated by the court geared towards fulfilling obligations with creditors.

The advantage of Chapter 7 bankruptcy is that the debtor becomes free of any obligation to pay off any money owed not covered by the sale of assets. However, it is not at all easy to successfully file for Chapter 7 bankruptcy. In most cases, unless a person is completely without the means to pay, a lawyer may instead suggest a Chapter 13 filing.

In this case, legal assistance will be immensely valuable because they can more effectively negotiate with creditors to get the best possible terms for their client. More often than not, creditors are willing to accept substantial reductions in their claims to ensure that they get at least most of the money owed. A bankruptcy attorney will also be able help you protect your property by getting a court-mandated delay in foreclosure or repossession.

While a person may independently file for bankruptcy, it’s more complicated than it seems. Legal representation may seem like a waste of money when financially distressed, but because there are many pitfalls of which the ordinary person may not be aware, it may cost more not to hire one.