Top Five Things to Do Before Filing for Bankruptcy
The bankruptcy process is demanding and emotional. Bankruptcy is designed to provide a new start, but keep in mind that the process is complicated. What follows are the top five things to do before filing for bankruptcy. These guidelines will make the process smoother and less stressful.
1. Compile information
If you haven’t already done so make a list with the following information and compile documents including:
- All of your debts including amounts owed.
- List all of your assets.
- Collect all of your deeds and titles to all property.
- Assemble all of your tax returns for the last three years.
- Proof of identity such as social security card.
- Any paperwork pertaining to loans, divorce decrees, or child support orders.
- Statements from brokerage and retirement accounts.
2. Talk to an attorney
While it is possible to file for bankruptcy without the help of an attorney, filing alone is confusing and time consuming. An attorney will advise you in the types of bankruptcy and how they will affect your assets, laws in the state in which you live, and help you deal with the courts and bill collectors.
An attorney concentrating in bankruptcy law will ask questions about your financial situation and explain all of the benefits and cost involved in the process. The attorney can also talk with you about the required counseling with a government certified counseling agency.
3. Pay some of your bills
It is important to pay bills such as rent, car payment, insurance and other basic expenses. However, when you file for bankruptcy your credit card will be considered unsecured debt and will be covered under bankruptcy protection. Your attorney can explain exactly what bills to pay up to the time bankruptcy is filed. Don’t rack up credit card debt near the time you anticipate declaring bankruptcy. The courts do not like to see large expenditures near the time bankruptcy is declared.
4. Change your lifestyle and be realistic
Now is the time to learn to make the most of less. There are many resources available that teach good budgeting strategies. Understand how your finances got out of control so it doesn’t happen again. If you have children now is the time to explain to them that their lifestyle will also change.
Keep in mind certain debt cannot be erased when filing for bankruptcy such as child support, alimony, student loans, and taxes. Your new budget should include these expenses. Keep all of your property in your name during this time. Also, while it might be tempting to transfer or gift your property to others before declaring bankruptcy, the courts may penalize you for doing so.
5. Change your phone number
As soon as an attorney is hired to help you file for bankruptcy bill collectors are no longer allowed to harass you for payments. Changing your phone number gives you the privacy you have lost.
Filing for bankruptcy is difficult and nobody wants to go through it alone. In addition to talking with a trusted attorney, talk to your friends and family for support. Don’t be ashamed; it’s time to move ahead.
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