SUMMARY: List of tips on what to do and not do if you are considering filing bankruptcy. Consult an experienced bankruptcy attorney for pre-bankruptcy planning.
The most critical thing you can do is consult with a bankruptcy attorney early. The attorney can help you identify potential problems. Before you file bankruptcy, you may want to consider these tips:
What to Do Before You Filing Bankruptcy
- Consult an experienced bankruptcy attorney and be very honest
- Change bank accounts if you owe any money to your bank, if even you plan on paying that debt back
- Keep social security funds, veterans funds and life insurance proceeds in a separate account
- Consider paying nondischargeable debt, such as certain taxes
- Try to stay current on essential, secured debt, such as your home and car
- Be prepared to account for how you have spent any windfalls of cash
- Keep good records
- Get all your tax returns filed
What Not to Do Before You File Bankruptcy
- Transfer any property to any one
- Repay loans to family members or friends
- Pay off or pre-pay your home, cars or other debt
- Liquidate an IRA, 401(k) or other pension plan
- Do not change the legal entity status of your business until you consult with an attorney
- Make new credit card charges or loans
Even if you own non-exempt assets, there are many ways to still keep your property while being honest and staying within the law. What creates problems for people is not being up front; being afraid of losing property; or trying to protect family by repaying loans. Problems can be dealt with — you just need to be sure your attorney knows about everything so he or she can help you.
Your Next Step to Debt Relief
If you are struggling with debt, consult with an attorney who can give you guidance on options available to you. Each case is different and consultation with an attorney knowledgeable about the law as it applies to your particular circumstances is an important first step in resolving debt.
Read More About Bankruptcy and Debt Relief
Chapter 7 – Usually the cheapest and fastest type of bankruptcy, Chapter 7 can wipe out credit cards, medical bills, and loans.
Chapter 13 – Does everything that Chapter 7 does, but with the added benefit of being able to help catch up on past due mortgages, car payments, and taxes.
Taxes – If you owe money to the IRS, there may be several different options for you, including some non-bankruptcy options.
Student Loans – There are many solutions to student loan issues, including getting a better payment plan, curing a default, and even loan forgiveness.
Debt Lawsuit Defense – When a creditor sues you over a debt, you can respond with a defense, which may allow you to win the lawsuit.
Loan Modifications – A special agreement between you and your mortgage lender might help you with a past due mortgage loan.
Debt Library – More in-depth articles on some of the more detailed areas of bankruptcy and debt relief.