How a Bankruptcy Lawyer Works With His Clients

The word bankruptcy comes from the composite Latin words bancus and ruptus, literally meaning a broken (ruptus) bench (bancus). In ancient Roman times, bankers set out benches in the market place from where they would distribute loans and effect financial transactions. If a banker became insolvent, his bench was shattered as a sign that he was no longer able to secure debts.

There was a diversity of ancient approaches to bankruptcy. Both Ancient Israel and Greece had procedures for insolvency and debt forgiveness, forgiveness after 5 years in Greece and 7 years in Israel. In the mean time, creditors might need to sell themselves as slaves to pay the debt. In actuality there were exceptions to the official policy in both countries, and being a debt slave was not so pleasant, even if he was a cut above ordinary slaves.

In other countries, the treatment of debtors was even worse. In the code book of Gengus Khan, a man who went into debt three times was put to death. From Russia comes tales of Cossaks who would brutalize and on occasion kill peasants who were unable to pay their debts.

In our days, modern civilizations offer an substitute to historical banckruptcy. People who become insolvent have the opportunity to pursue debt restructuring and bankruptcy education designed to help debtors reorganize their debts and maintain their financial life. In the United States, the power to carry out laws of bankruptcy is taken from Article 1, Section 8, Clause 4, and the Bankruptcy Code, is located at Title 11 of the United States Code.

Much of the focus of American debt law is

1.  To enable debtors to recover as much as possible and 
2. To reeducate the debtor so that he won't go into debt again after he comes out of bankruptcy. The education process in bankruptcy is at least three fold.

The first part of the retraining comes from the debtors interaction with the bankruptcy lawyer. A bankrupcty attorney spends his entire legal life in the court systems and tries cases before Judges who interpret and in some cases create current thought about bankruptcy. During the first meetings with the client, the bankruptcy lawyer will help the client to explain the financial mess he has gotten into, in an orderly fashion. His financial state of affairs will be transposed into a detailed description of assets,debts, including liens on property and back taxes, current monthly income, and expenses. The client will be requested to summarize how he came to be in debt.

If the debtor decides to pursue the process further, he must take a bankruptcy counseling course given by licensed professionals. During this course he will learn techniques of debt management, and he will decide if he is capable of getting himself out of debt with the help of these techniques, and thus avoid bankruptcy, or if he feels the need to proceed with bankruptcy .

If he chooses to proceed with bankruptcy, he must take a course on bankrupcty management. This course will provide him with the information he needs to proceed with the  procedure and to stay out of debt after he returns from bankruptcy.

During the course of the procedure, the bankruptcy lawyer, the courts, the debtor, and the creditor will communicate in and out of court, and in keeping with the bankruptcy laws the debts will be reorganized and settled to the greatest extent possible, and some of the debt will be forgiven. When the debtor comes out of bankruptcy, he will be permitted to continue his business, with whatever credit constraints the court concludes are appropriate.