What To Do With A Potentially Unusual Bankruptcy

The bankruptcy system can deal with a wide range of problems using a handful of basic legal tools. Chapters 7, 11, and 13 of the bankruptcy code tend to address the issues in most cases well.

However, not all bankruptcies are perfect. What should you do if you're dealing with an unusual case? A bankruptcy law attorney will encourage you to go through these three steps.

Request Counsel

Even someone dealing with a straightforward Chapter 7 case should strongly consider hiring a bankruptcy lawyer. As a case becomes potentially more complicated, the need for a bankruptcy attorney goes up.

Contact a lawyer so you can arrange a consultation before you consider filing any paperwork. An attorney can review your situation, determine what might be odd about it, and recommend a course of action. In the vast majority of cases, one of the standard three bankruptcy filings will get the job done.

Explore Possible Solutions

Okay, a bankruptcy attorney says you do have a slightly weird case. What are your options?

A lot depends on the situation. For example, the Chapter 12 system carves out a version of Chapter 11 that helps family farmers and fishers deal with year-to-year variances in yields. If you don't run a farm or a fishing operation, then you can assume Chapter 12 isn't for you.

Similarly, Chapter 15 is for folks who are trying to combine American and foreign bankruptcy proceedings. If you don't have any overseas debts, you can take Chapter 15 off the board.

One of the trickier possible solutions is a combined Chapter 7 and 13 filing, sometimes called a "Chapter 20" bankruptcy. You do not want to even joke about trying this one without the help of a bankruptcy lawyer. The idea is to liquidate some of your debts in Chapter 7 and then immediately ask the court to restructure your remaining debts under Chapter 13. 

There are also cases where some individuals might file for Chapter 11 if they have debts in the millions. Similarly, some unincorporated, sole-proprietor businesses can file for Chapter 13 personal bankruptcy.

Document Your Situation

Attempting to use any of the bankruptcy solutions in the previous section calls for significant documentation of your circumstances. If a farm operation seeks Chapter 12 protection, for example, there has to be proof it's a family farm. Otherwise, an agribusiness will likely have to pursue some form of Chapter 11 petition like any other enterprise would.

You can expect the court to scrutinize any bankruptcy case. However, the further off the beaten path you go, the more scrutiny there will be. Lawyer up.