Bankruptcy is a big step for most people to take. Considering bankruptcy means that you are already in a stressful position, trying to pay bills and handle the insistent calls of creditors. The process can be overwhelming. And often we do not do our best thinking when overwhelmed by the pressure of financial insecurity. So, take a breath. Try to relax. We are here to help. If you are considering bankruptcy here are a few easy steps to help guide you toward the right decision for you, for your family, and for your future.
How Bad are Your Finances? Really?
Living paycheck to paycheck is hard, but this does not mean you are on the brink of financial collapse. Even falling behind on payments such as mortgages or car loans can be remedied. Before attempting to file for bankruptcy, it is important to sit down and make an honest assessment of your financial picture. Often credit counselors are a great resource in this area. It is possible that changing your spending habits or arranging your debt differently will begin your climb back to solvency. At the very least you will come to fully understand your assets, income, and liabilities. This knowledge will be invaluable if you move forward in the bankruptcy process.
Live as Simply as Possible
Once you become more aware of the true economics of your situation, you should be able to see where money is being wasted. The goal is to stop the bleeding. To gain on your debt, you first need to stop falling behind. Do not use credit cards or secure loans which will add to your debt. Attempt to live on a budget that provides food and shelter with nothing extra. This will require difficult choices, but it is the right path to take. Changing your habits will save you money and signify to a trustee that you are attempting to correct your problem.
Begin Establishing Clear Spending and Earning Patterns
If you receive payments as a small business owner, make sure this money is separate from your personal accounts. It is important to start establishing a transaction history that reflects how much money you personally receive and how much you are paying out. Remember, everything that comes in and out of your account is telling a story about how you live and how you prioritize when spending money. The goal is to leave an easy to follow roadmap which shows everything possible is being attempted to climb out of debt with the money available.
Do Not Try Creative Solutions
Many people think of quick and creative solutions to generate money or hide assets. Frankly, this is a bad idea. If you file bankruptcy a very experienced person will be looking at your finances, and they will discover what you have done. They may even think it is a fraudulent conveyance, which is a legal term for hiding money unlawfully. Do not transfer vehicle titles into someone else’s name, properties into corporations or trusts, or accept or disburse large amounts of cash using your personal accounts. All of these will be flagged and investigated by a bankruptcy trustee. The trustee has the ability to look into your past transactions and history, but only for a designated “look back” period. If you have done some of these things already simply waiting out the look back period might solve the issue. If waiting is not an option, definitely consult an attorney before filing.
Do Your Own Research into Bankruptcy
It is in your best interests to investigate as much about bankruptcy as possible before filing. Just understanding the difference between Chapter 7 and Chapter 13 is not enough. The more you learn about the entire process, the better prepared you will be if you decide to file. Understanding bankruptcy will make it far easier to communicate your questions and concerns to your attorney or bankruptcy trustee throughout the process. Understanding why decisions are being made or options are being offered will speed the process and make you an active participant with a say in the final outcome.
Consult with an Attorney Before Filing
Yes, you can file for bankruptcy without an attorney, and many choose to do so. But why? An experienced bankruptcy attorney will be your advocate in the proceedings and get you the best possible results. Bankruptcy law is complicated and requires many important decisions to be made, all impacting your future and the future of your family. It makes sense to have someone in your corner who knows the process, can guide you over every hurdle and has your back during a difficult and stressful time. The goal is to come out of bankruptcy with a fresh start on life. Enlisting the services of an attorney is your best bet to accomplish this.
