An emergency bankruptcy is just like it sounds – something financially urgent and of an emergency nature comes up and fast action needs to be done to stop it or very bad things could or will happen.
While bankruptcy is ideally something that is well researched and contemplated before filing, that is not the way most bankruptcies come about in the real world. Emergency filings often center around the filing of a lawsuit, wage or bank account garnishments, or, more seriously, a house foreclosure.
Bankruptcies are powerful and literally stop imminent collection, repossession, and foreclosure action if you file in time.
Advantages of an Emergency Bankruptcy
What makes an emergency bankruptcy different than a regular one? The answer is that only a small portion of normal documentation needs to be filed to get a case filed with the condition that the remaining detailed documents must be filed within fourteen (14) days of filing the emergency petition.
Specifically, only very minimal information, such as your name, social security number, address, and list of creditors needs to be filed to get an emergency case filed. One more requirement, however, is that you must take a pre-bankruptcy credit counseling course, but that only takes an hour and can be done on the Internet.
Your bankruptcy attorney knows how to get these things done within hours in the case of a real emergency.
Disadvantages of an Emergency Bankruptcy
What are the drawbacks of an emergency bankruptcy filing? In short, not knowing what may be discovered after you file that may have changed the decision whether to file an emergency petition or not.
Bankruptcy attorneys want and must know your entire financial picture before they help you file a case because being in the dark can have very dire consequences. However, if a client chooses to proceed with an emergency bankruptcy without giving their attorney sufficient time to do a complete background review, bad things could result and the client takes that chance at their own risk.
Some horrible examples of filing without knowing what lies ahead can result in losing some assets, including your house, bank account funds, and putting a relative or friend in a bad situation of having a bankruptcy trustee sue them for the money you paid them back within the last year. These are but a few examples, but the list is very long.
The way to avoid many of these potential negative consequences when needing to file bankruptcy is to provide complete information to your attorney before the case is filed. Avoid attorneys that don’t take at least a few hours with you to ask you numerous questions about your situation.
You should expect to be asked all kinds of questions that dig deep into your financial past and do your very best to tell your attorney all of the facts. A good attorney will probe with numerous follow-up questions and will dialogue with you until he or she feels comfortable with your answers. There are no shortcuts.
That said, all of this can be done very quickly but just filling out a few forms and spending just a few minutes with the attorney puts you at high risk. Finally, don’t be shy to ask any question that comes to mind. There are no silly or dumb questions.
Chapter 7 Bankruptcy
A Chapter 7 bankruptcy is the most dangerous type of emergency bankruptcy to file because you do not have a legal right to dismiss your case if complications arise. Why many people prefer to file Chapter 7 cases, they are inherently dangerous under certain circumstances, especially when the attorney’s office hasn’t had the normal time to prepare a full bankruptcy filing. Again, you are in an emergency situation and quick action is needed. Only the most basic of Chapter 7 cases should ever be filed under emergency conditions.
Unfortunately, there has been a nationwide trend among some bankruptcy attorneys to file most Chapter 7 cases as emergencies filings and then do the investigative work to dig into your situation after you have already filed. These law firms offer what they call a “bifurcated” bankruptcy where they just file the quick and fast emergency documents and charge very little upfront and then, within the next 14 days, only truly discover what is really going by spending more time looking into the case. They offer you two deals, with one being to pay a small amount upfront and then make monthly payments to pay their fees after the emergency is filed. This is a very questionable thing to do and bankruptcy authorities and courts are currently perusing action against this practice.
Chapter 13 Bankruptcy
Most emergency bankruptcy cases should be filed as Chapter 13 petitions since you can dismiss the case for any reason if you are acting in good faith. Additionally, even if a Chapter 7 case is appropriate, you can almost always convert to Chapter 7 anytime after filing a Chapter 13 (if you qualify for Chapter 7). Thus, Chapter 13 emergency filings are inherently safer and give you a safety valve if things go awry after you file an emergency petition.
The bottom line is that even the simplest of cases can have some little detail that causes problems down the road. Chapter 13 gives you and your attorney the extra time to get what is called “due diligence” to a higher level of confidence within the 14 days after a case is filed.
We Can Help
The bankruptcy attorneys and staff at John T. Turco & Associates, P.C. don’t cut corners and you get the same full-service treatment even during emergency situations.
Contact us for immediate relief if you believe you are in an emergency financial situation and get the best of both worlds, fast and thorough results, and with multiple options presented to you before making a decision on how to proceed.