Preparing for Bankruptcy
The word “bankruptcy” brings a lot of not-so-positive connotations, but in reality, this could be the best choice for you and your family. However, because there’s so much negative discourse about it in our society, many people don’t fully understand the process or how they can help themselves by methodically preparing for bankruptcy. If you’d like to speak with a knowledgeable bankruptcy attorney about your options for filing with Chapter 13 or Chapter 7 bankruptcy, reach out to COFFYLAW, LLC. The attorneys at COFFYLAW, LLC have an abundance of knowledge and practice when dealing with bankruptcy matters. With offices in New Jersey and New York, COFFYLAW, LLC, represents clients across the nation.
What to Do to Prepare for Filing for Bankruptcy
When you start working with an attorney, they’ll ensure you’re following all applicable laws and that you’re prepared for filing bankruptcy and for what your life will look like afterward. You can help make this process a bit more streamlined by keeping in mind a few key things:
- Make Sure You Have Filed Required Tax Returns: Having completed tax returns will be one of the most important financial documents you’ll need when filing, so this should be your first priority if you have any annual returns that haven’t yet been filed.
- Pay Off Necessary Bills: You’ll always want to be as up-to-date on any necessary bills as possible before filing. While this is a good idea to show you’re making an earnest effort to meet your debt obligations, it also has the added benefit of lowering the total amount of money in your bank account. This is important because the court will be permitted to take money from your account to fulfill other debt obligations, but they can only do as much as deemed necessary that won’t inflict economic hardship on you. Thus, the lower the balance in your accounts, the less the bankruptcy trustee can take from you.
- Stop Automatic Payments: After your application has been received by the courts, a judge will place an automatic stay on your accounts which means your creditors are prohibited from contacting you about your debts. You can help prepare for this by canceling all automatic payments in case the automatic deductions continue to be taken out even after the stay has been put in place.
- Document Debt Information Honestly and Thoroughly: Above all, you should always be honest and transparent with the courts and your attorney through all your bankruptcy proceedings. This includes documenting all your debt obligations as thoroughly and truthfully as you can. You should never try to misrepresent yourself, or else you risk real legal consequences.
What Not to Do Prior to Filing
Just like it’s important to know what to do before filing, you should also know what not to do before bankruptcy.
- Don’t Pay Debts That Would Be Dischargeable (or use assets that will be protected): It’s essential to understand that not all debts can be discharged after filing. Unpaid taxes, student loans, or past-due spousal or child support payments will not be discharged and will need to be paid off. However, credit card debt, medical bills, or other consumer debt can be discharged. Because of this, you should stop paying off debt that will eventually be discharged and instead focus your budget on the debts that will stay with you.
- Don’t Wait Until Creditor Has Won a Judgment: You should always know ahead of time what your actions will be regarding your creditors, and you shouldn’t wait until they’ve won a judgment to react. Your attorney can help you communicate with the courts and your creditors to ensure automatic stays are complied with.
- Don’t Use Retirement Account to Pay Debts: Most retirement assets can be protected in a bankruptcy case, so you never want to use these funds to pay off debts.
- Don’t Acquire New Debt: Once you know you’re going to file for bankruptcy, stop using credit and accumulating more debt unless it’s for absolute necessities like paying for rent or groceries.
- Don’t Move Assets (Transfer Funds or Property): In the preceding months, keep all funds and assets in their own accounts and don’t move money around, or else you could be accused of trying to hide assets from the court.
- Don’t Selectively Pay Off Some Loans: While it is okay to focus on debt like student loans or back taxes, you don’t want to pay off personal loans to friends or family while ignoring your other obligations.
How Legal Counsel Can Help
A skilled attorney can help you assess your situation and help you determine the best course of action for your circumstances. And, if the best answer isn’t filing for bankruptcy, an honest lawyer will never push you in this direction when it might be a better idea to work with a financial advisor on restructuring your loans and implementing a payment plan. They can also help you file forms, stay on top of deadlines, and represent you when you appear in court.
For help with any of your bankruptcy needs, contact COFFYLAW, LLC today for reliable legal guidance. A wise attorney can analyze your options while keeping your best interests in mind. COFFYLAW, LLC represents clients across the nation from their offices in New Jersey and New York.