8 things to do before filing bankruptcy

bankruptcy petition

Many things that you do or don’t do might have serious effects on your bankruptcy concerns. If you already made the decision to file bankruptcy, you need to realize that this decision is not an easy one. Having come up with such difficult decision, it’s vital to avoid certain mistakes as well as actions before filing bankruptcy.

The following are 8 things to do prior to filing:

1. Consider Speaking with a Knowledgeable and Experienced Bankruptcy Lawyer

Even those who are not yet ready to file a bankruptcy, talking with a knowledgeable and experienced bankruptcy lawyer will provide you with information that you need to come up with the most informed decisions. One of the typical problems lawyers face is meeting with clients when everything is too late. If you have been summoned or served with complaint, talk with a bankruptcy lawyer as soon as possible.

2. Assess Your Monthly Expenses

All consumer bankruptcy petitions usually include Schedule J. This is the estimate of projected and average monthly expenses for your household especially during the period that the bankruptcy case was filed. Again, scheduling an appointment with a bankruptcy lawyer is crucial for you to figure out where the money is really going every month.

3. Ensure that your Tax Returns are All Filed

There have been newest guidelines set for filing bankruptcy and tax returns. In case you will file for bankruptcy, you’ll need to secure your tax returns for previous years or for the current years if needed. Failure to file your returns which become due upon filing your bankruptcy, IRS might request dismissal of your case.

4. Don’t Take Cash Advance on Credit Cards

Taking cash advance close on the period of filing bankruptcy can certainly become a big problem. It somehow depends on the circumstances however, if you take about $5000 cash advance on credit card about 3 weeks prior to filing bankruptcy, you might probably hear something from the credit card company. So don’t take cash advance on credit cards before filing bankruptcy to avoid issues.

5. Don’t Continue Using your Credit Cards

One of the typical issues in consumer bankruptcy is using credit closest in time for filing bankruptcy. The real problem here is recent use of credit which is circumstantial evidence that the user does not have the intent to pay back the debt. If you’re not making the right payments into your creditors, then don’t continue using your credit card. This also helps you stop incurring more debts.

6. Don’t Transfer Assets or Money to Family or Friends

Simple transfer of car to your family member of friends prior to filing bankruptcy to reduce assets is no really allowed. This must be disclosed and will only just make your bankruptcy case more complicated.

7. Don’t Take Early Withdrawal from Individual Retirement Account and Don’t Borrow Funds

Bankruptcy actually provides exemption in protecting assets like retirement funds. However, individuals are advised to weigh all the negatives and positives before borrowing funds or withdrawing from retirement account. Note that you can file bankruptcy but still keep your retirement.

8. Disclose All Personal Assets, Income and Expenses

This is the most important thing to do before filing bankruptcy. You need to file these to obtain bankruptcy protection. Make sure to disclose all assets, income and expenses in their petition.

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About the Author: James Watt

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