Preparing for bankruptcy is not always as easy as it seems on a paper or article. Preparing for bankruptcy requires that the debtor is in the right mindset and in a good emotional place. Bankruptcy can be an emotionally draining procedure so make sure that you plan ahead of your bankruptcy. You want your bankruptcy to go smoothly so that you are in and out of the court as quickly as possible and on your way to rebuilding your credit. If after a clear assessment of your financial affairs you find that a bankruptcy is your only solution you will want to consider the following before you enter a courtroom.
When you prepare for a bankruptcy you will need to:
- Find the right bankruptcy attorney: Bankruptcy Code provides a variety of Chapters that apply to different circumstances and individuals. Bankruptcy provides different remedies and provides different procedures depending on the types of debts that a debtor may want to discharge and the debtors earning potentials. For instance, a debtor with a high earning potential and enough disposable income at the end of the month may not be capable of filing a Chapter 7. Furthermore, a debtor with debts over a certain amount may not be capable of applying for bankruptcy through a Chapter 13 and may be required to work through a Chapter 11. Your specific situation will dictate what type of Chapter you will have to file through so make sure that your attorney is an expert in the Chapter that pertains to your case.
- Prepare the appropriate documents: To make sure that you case is processed in a time efficient manner, you will want to prepare the right type of documents for your case. If you are filing for a Chapter 7 you may have to supply additional documents than if you were filing through a Chapter 13. For instance, a Chapter 7 requires that you pass a means test which means you will have to provide financial statements that show you qualify for this type of bankruptcy. Preparing your documents before you meet with an attorney will certainly expedite the procedure, but feel free to contact a local attorney if you need assistance in collecting the documents for your case.
- Accept that your living conditions will change: In most cases debtors will need to adapt to new living situations. If debtors are losing their home or vehicle they may want to start looking for living options that are close to their work so to avoid the costs of transportation. Debtors will not be able to take out loans or credit lines for a certain time so it may impact their spending habits.
- Stop paying your creditors: Unless your attorney lets you know who to stop paying, you will want to stop paying back any unsecured lender. For instance you will want to stop paying back your credit cards and save that money for a good attorney. Credit card loans are discharged through a Chapter 7 bankruptcy so it makes sense to stop these payments while you are filing for bankruptcy. You will want to speak with an attorney who can help you assess what type of credit lines can remain unpaid while you file for bankruptcy.
- Stop automatic payments: Sometimes when we are financially stable we will engage in an automatic payment program. Often times we subscribe to these monthly automatic payments to ensure that we do not miss a payment. However, when you are filing for bankruptcy, you should make sure that you are not paying your creditors through an automatic payment system. You are encouraged to speak with your bank about the automatic payments so you avoid making payments while filing for bankruptcy.
- Notify your creditors or debt collectors: When you file for bankruptcy the court will send a letter to debt collectors so that they are aware of your bankruptcy intentions. Most importantly, the court will send creditors notification of the automatic stay laws which prevent debt collecting activities during the life of your bankruptcy. However, when the court does not notify your creditors of your bankruptcy, you may want to contact your creditors yourself to ensure that they are aware of your bankruptcy protections. Debtors that act quickly enough are able to prevent a debt from being charged. Debtors that have filed for bankruptcy are encouraged to personally let their creditors know about their bankruptcy either through a phone call, through an email, or through the mail. If you are working with an attorney, the attorney will contact the creditors to ensure that they are aware of the debtor's protections.
- Tell a friend: A bankruptcy can be emotionally difficult and it usually helps to tell your close friend or a family member. Talking about your situation may help you release some of the stress you may be feeling. A bankruptcy is nothing to be ashamed about, but it can definitely make you feel a certain way.
Before you engage with a bankruptcy, it is important to consult with one or two attorneys so that you have a clear understanding of your case. In addition, you will want to make sure that a bankruptcy is your only option before you engage with the procedure. A bankruptcy is a time-consuming process that does affect your credit history. A bankruptcy is not for everyone, so make sure that a bankruptcy is something that you want to engage with before you file a bankruptcy petition. To have your case analyzed by a bankruptcy attorney, you may contact the Bankruptcy Attorney at 424-285-5525
Find the Right Bankruptcy Attorney
You want to make sure that your attorney is capable of handling your case and capable of providing the right type of guidance. In general, an attorney will be a specialist in individual bankruptcy cases or an expert in business bankruptcies. Business and non-business related bankruptcies are different enough to allow bankruptcy lawyers to become experts in one type of bankruptcy over the other. In addition, a bankruptcy lawyer that has only had experience in Chapter 7 may not be the right type of lawyer if you are seeking to file through a Chapter 13.
- A bankruptcy attorney should have the right type of knowledge and experience on your specific bankruptcy chapter. You may want to speak to the attorney about his or her past bankruptcy experiences. You may even ask your attorney for some references.
- A bankruptcy should not cost over the roof. Make sure that you have enough quotes on your case to ensure that you are not being ripped off. You can usually accomplish this by speaking with various attorneys building a list of their prices.
- A bankruptcy attorney should have enough free time for your case. Make sure that your attorney is not all over the place handling different cases. You want an attorney who will take the time to sit down and analyze all of the factors in your case. A good attorney will help you choose the most appropriate bankruptcy chapter for your case. In addition, he or she will make sure that you maintain the most after a bankruptcy.
- You should like your attorney. Does your attorney have a good personality? Do you feel comfortable enough contacting the attorney? Individuals with certain personalities are hard to work with. You want to make sure that the person going over your financial situation is someone you can trust and communicate with openly.
Choosing the right type of bankruptcy attorney will require that you do some research and have a clear understanding of your personal goals and of your economic situation. You are encouraged to speak with local attorneys to determine which attorney works best for you.
Prepare the Appropriate Documents
Whether you are filing for a Chapter 7, 13, or 11, you will want to make sure you have all the required documents to file a bankruptcy. Preparing your bankruptcy documents before a bankruptcy will facilitate the entire process. When filing for bankruptcy, you will be asked to prepare a variety of financial statements in order to determine your financial standing. If you are filing for bankruptcy, you will want to prepare the following documents:
- A statement of your real estate: Debtors will need to provide a statement that includes their property and the value of their property in the current market. Debtors that have mortgage loans will need to provide a statement that includes the mortgage loan balance and payment information.
- A statement of the amount of vehicle you own: Debtors will need to provide the number of vehicle they own and the value of each vehicle. In addition, if the debtor has an active car loan, he or she will need to provide the remaining loan amount and payment information.
- A statement of your financial affairs: Debtors will need to be as transparent as possible when it comes to their financial affairs. For this reason, debtors should prepare recent and past bank statements and/or retirement account statements.
- Tax information: Debtors will need to provide a transcript of their taxes from up to four years prior. When filing for bankruptcy the court will take into account the debtors earning potentials especially if they are applying for a Chapter 7 which requires that the debtor pass a means test.
- Statement of your income: Like with the tax documents a statement of income will allow the bankruptcy court to have a better understanding of the debtors financial standing. You will want to prepare your W-2 and other documents that explain income coming from rented property or disability benefits.
The types of documents that apply to your bankruptcy case will usually be determined by the chapter of bankruptcy that applies to your case. As mentioned earlier, different bankruptcy chapters will have different requirements. However, the documents above are applicable for most individual bankruptcy cases so make sure you prepare these documents. In many cases, having these documents ready will allow your attorney to have a better understanding of your case which may expedite the bankruptcy procedure.
Stop Paying Your Creditors
You are filing for bankruptcy to address your debt so you do not have to keep up with credit card payments. When you file for bankruptcy your credit will take a hit whether you paid your creditor a month or six months before filing for bankruptcy. Use the money you would have used to pay off your credit to pay a good attorney.
Accept that Your Living Conditions Will Change
Filing for bankruptcy can mean that you lose your home or vehicle. You will have to mentally prepare for this reality and you are encouraged to take necessary steps to address these concerns. You will also not be able to take out credit lines with a substantial amount of credit. Individuals who live off of credit cards will need to learn to handle money so that they avoid future debt problems.
Notify Your Creditors or Debt Collectors
One of the most common reasons that a person files for bankruptcy is to receive protection under the automatic stay. A bankruptcy court may not contact all of your creditors in time which means that they may still charge a debt or may pursue debt collecting. Make sure that you or your attorney contact your creditors to ensure that they are knowledgeable about your bankruptcy. When you notify your debtor you will ensure that your debt collectors are aware of their obligation to abide by the automatic stay laws.
Debtors that are heading towards bankruptcy are encouraged to speak with a local bankruptcy lawyer that is aware of bankruptcy procedures. Bankruptcy attorneys should be ready to use different motions and objections to ensure that your bankruptcy case is advanced. Above all you will want to make sure that your attorney is capable of handling your case to ensure that you do not lose more than you have to. Bankruptcy is treated differently in every state so make sure that you speak with an attorney who can apply local laws to your case. To speak with the Bankruptcy Attorney, you may contact our office at 424-285-5525.