When Life Gives You Lemons — Call an Attorney

When you file for bankruptcy, you expect that your money troubles will finally be over, or at least under control. What you do not expect are creditors sending their lawyers to your bankruptcy hearing to argue for money owed. While this only happens in a very small percentage of bankruptcy cases, it does happen. When it happens to you, here is what you should do next. 

Refer ALL Calls from These Creditors to Your Lawyer's Office

Anytime these particular creditors have called to harass you, you should refer them to your bankruptcy lawyer. Your lawyer would keep track of the number of times these creditors have made themselves a nuisance. When these creditors decide to show up to your bankruptcy hearing, your lawyer can present this to the judge to show how these creditors have handled themselves and you to this point. Then your lawyer can argue, that due to the harassment, the debt you owe to the creditors should be included and not excluded from the bankruptcy.

Show Undue Financial Hardship

You cannot squeeze blood from a stone, or golden eggs from a goose. That said, your creditors can no more squeeze you for money or assets you do not have. If you are able to show that you do not have a nickel to your name beyond the paycheck you receive to pay bills and survive, your lawyer can show that you would suffer undue financial hardship if the judge were to force you to pay what the creditors are demanding. The judge may decide to cancel the petition from the creditors to pay what is owed, and include that debt in the bankruptcy discharge.

Agree to a Significantly Lesser Settlement 

If the judge agrees with your creditors, your lawyer can argue for a dramatically lesser settlement and payment arrangements. You may also get all of the interest owed on the loan removed to make it easier to repay the principal amount borrowed on a loan or on credit. It is not the best option, but when this judge says you have to pay something, and an appeals judge is likely to back that decision, it is just better to take the initial deal.

Appeal 

It is very unusual to appeal a bankruptcy decision, almost as rare as having creditors send lawyers to your bankruptcy hearing. Yet, it is one of the many bankruptcy legal services that are available to you. Be sure to have your lawyer explain the possible legal ramifications of choosing to appeal the judge's decision with regards to an appeal.