Before You File for Bankruptcy, Follow These Steps

By Lawrence Cohen

Bankruptcy can be normally a time-sensitive procedure and pre-bankruptcy preparing could be essential in preserving assets. Chapter 7 Bankruptcy, in particular, the trustee’s job is to “look back” at the procedures the debtor has taken to assure there hasn’t been a fraudulent conveyance of assets, a non-allowed preference payment to creditors or any other actions that might leave assets exposed. It’s vital, if you are considering personal bankruptcy, think about using the proper steps to insure a successful filing:

Check with a lawyer. The bankruptcy laws are getting so detailed that consumers must not attempt to file without any help. This can be a very hazardous procedure to try and achieve all by yourself. Since 2005, there’s a challenging “Means Test” required, government-approved credit counseling, as well as other modifications which made the filing of Bankruptcy far more difficult. Despite the fact that at some point file pro-se (representing yourself) check with a lawyer and ask questions regarding whether bankruptcy is the right alternative for you. You are looking for an attorney that’s there to fix your troubles and sees bankruptcy as one of the choices. This is really critical when you’ve got assets (Home, Car, Cash) that have to be considered and your debts are significant and varied. If your attorney’s suggestion is still to file for bankruptcy, ask what the many benefits are as well as costs.

Keep Your Paperwork organized. When I talk with clients, it is often the case that their paperwork, be it bills, taxes, etc. typically are not organized in any good way. This makes it considerably more troublesome and time intensive to review a client’s case. For these reasons, it’s a very strong suggestion to collect all documents from bill collectors. Go online and obtain detailed addresses of creditors who have quitted charging you. Check the bills at financial institutions in which you bank. Look at your current tax returns in order to provide your gross income within the last 3 years. Basically, become familiar your assets and liabilities as well as have them prepared and organized for the lawyer to prep your case.

The more thorough you can be in supplying a summary of your creditors, the less worries or headaches you should have from creditors when your bankruptcy case is finished. When you know that you need to file, begin to keep all correspondence that is delivered from debt collectors, debt collectors or others that are planning to collect on your debt. The disclosure requirements are now even more strict so you want to be sure that you have forwarded all of the creditor information to your attorney. In case you happen to be unclear about exactly who you might pay back, you should consider obtaining a copy of your most recent credit reports. Just about every year you can obtain a free copy of your credit reports from the 3 main credit agencies reporting companies. These are TransUnion, Equifax and Experian and they can be obtained by visiting annualcreditreport.com. Especially in case you are not aware of the creditors listed on your reports, supply those to help your attorney anyhow. When you seek credit following your filing for a mortgage, car loan, or personal loan, you want to be able to demonstrate that each of the items on your credit report were listed and discharged from your bankruptcy case. The guideline to be aware of is the fact that anyone who is owed shows up on your bankruptcy petition and schedules.

Avoid Using Your credit cards or incurring additional debt. Once you have chosen to file a bankruptcy you must stop using credit cards or borrowing money right away. If you continue to incur new debt before filing, it might induce an objection from the creditor and you could be required to pay back the funds. Any recent purchases or finances might be held still due and owing after you file bankruptcy. The rational is that you never intended to pay those debts back and is tantamount to fraud. If you happen to be looking for a fresh start, do your very best to make sure that you’re going to indeed receive that new beginning. The credit card providers are very mindful of efforts to run-up the charges on credit cards. This approach also pertains to cash advance loans. If you get an advance loan too close to filing bankruptcy, you may well see an objection from your credit card providers. The objection will be in the form of an adversarial complaint. If the creditor is successful with their opposition, the amount of the recent advance(s) can be obtained due and outstanding after your bankruptcy case.

File your own taxes. You must file your most current year’s taxes to be able to get Chapter 7 bankruptcy relief. Despite the fact that this may seem like a simple requirement, you’d be amazed at the number of individuals who have not filed their latest taxes. A copy of your return will be given to your designated bankruptcy trustee once your case is filed. You will need to provide your most recent tax return to any creditor who requests it. Be ready to produce the last 2 years returns, both federal and state.

Provide your most current pay advices. You are required to supply the latest Sixty days worth of paycheck stubs during the time your case is filed. These will be sent to your assigned bankruptcy trustee or may be filed with the clerk of your bankruptcy court. This measure is in place to be certain that the quantity listed on the petition for monthly income is indeed accurate. If a person gets income from a source other than employment, proof of that income has to be provided, much like a paycheck stub. Once you know that you are probably going to file bankruptcy, keep copies of your paycheck stubs in an organized manner.

Do not sell, give away or exchange property of anything prior to filing your bankruptcy case without first going over it with your attorney, including money owed to loved ones. Doing this might allow a bankruptcy trustee to go after the home. Money paid to relatives and friends within 12 months before your bankruptcy might be reclaimed by the bankruptcy trustee. If the amount of money paid is minimal, the bankruptcy trustee will most likely not care, but it’s wise to be cautious. Transferring possession of property to repay a debt owed to a person could enable the bankruptcy trustee to get your home back as a “preference” payment. Remember, an integral concept in bankruptcy is the fact that all of your creditors are entitled to your non-exempt assets equally, this is applicable to money owed to friends or family members too.

Don’t keep assets off your bankruptcy forms, such as lawsuits or claims you might have. The only way to exempt an asset and protect it from the bankruptcy trustee is to try to list it as exempt and under the appropriate New York exemption law, federal exemption law, or other state exemption laws if you haven’t resided in N . Y . for long enough. Intentionally leaving out an asset is often a federal crime. The smarter option is to candidly speak about all of your property with your lawyer, through proper pre-bankruptcy planning to see what can be accomplished to protect your assets. If this isn’t achieveable maybe a chapter 13 bankruptcy could correct the problem. Moreover, if you don’t list your claim or lawsuit you may never have the ability to get that suit in the future!

Please don’t take money out of retirement plans, IRA’s or 401K’s. Under almost all circumstances, funds in a retirement account remains safe and secure from the trustee should you file bankruptcy. Having said that, if you remove funds from the retirement account, it most likely loses its exempt status and the money will no longer be secured. Speak with your legal representative about this if you really have to take out some funds. Be especially cautious of taking a loan on a retirement account, as they are very rarely dischargeable in bankruptcy.

Be careful filing bankruptcy if you’re expecting a hefty tax refund. An income tax refund is recognized as “cash” under the Bankruptcy Code and a bankruptcy trustee may take a lot of if not all of the refund, if not smart. The better option is to postpone your bankruptcy if you’re able to, have the refund, then consult with your lawyer about where you should spend the money that won’t get you in danger. This approach will require a bit of organizing and could delay the filing, but pre-filing strategy will be essential.

Be Cautious placing your name on any Asset. Don’t put your money into someone else’s banking account or place your name on someone else’s account. Plenty of people place their name on the elderly parent’s account “just in case.” This may be a poor approach. If you need to be able to assist your parents in case there is disability or illness, a power of a lawyer might be a better choice. Keep in mind: any asset with your name on it is YOURS, even though you may rarely use it (Car title) or contribute to it (bank account). Remember to be completely honest with your lawyer. Your lawyer can’t supply you with helpful advice if he or she doesn’t understand all the details.

Contact a Long Island bankruptcy attorney today to learn more about chapter 7 bankruptcy and to get help today.

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Tags: Bankruptcy, bankruptcy attorney, bankruptcy law, chapter 7 bankruptcy, debt, Debt Consolidation, family, Finance, finances, law, Legal, legal advice, money

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