Preparing To File For Chapter 7 Bankruptcy

23 June 2018
 Categories: Law, Blog

Once you've decided to file for bankruptcy, it's time to make your preparations. A bankruptcy filing can take up to half a year to finish, during which time your finances may be in "limbo." Chapter 7 bankruptcy filing services and bankruptcy attorneys can help. Here are a few of the general steps you're going to need to take in preparation.

Complete Credit Counseling

Declaring bankruptcy generally requires that you go through the process of credit counseling. This process is intended to ensure that you don't fall into debt again later on. The goal of bankruptcy is to give you a firm financial foundation, on which you can begin to build your assets and your credit. Your credit counseling can be done online and should be done shortly before you file your documents.

Get Your Paperwork Together

You'll want to get together a complete listing of your assets and debts. Print out bank statements, credit card statements, loans, and even retirement accounts. Though your retirement accounts can't be touched by bankruptcy (except in a very small set of circumstances), you still want to provide all of the information. You will also need your income information, as you will need to pass the bankruptcy "means" test.

Consider Your Exclusions

When declaring bankruptcy, there are two major things that you can decide to keep: your vehicles and your homes. Your vehicles are exempted up to a certain value; if you owe less than that amount in equity on the car, you will likely be allowed to keep it. However, you should still consider whether you want to keep it, or whether it may be an undue financial burden and something that would be better off liquidated.

Likewise, most bankruptcies are going to let you keep your home, unless your home is worth a very large amount and you have a good deal of equity on it. However, you should look at your budget realistically to determine whether you can make the payments reliably. If you are in a luxury home, the bankruptcy courts may want to see you reduce your housing costs.

There are also some things you shouldn't do when preparing for bankruptcy. You should not shift any assets around or attempt to give large gifts to friends or family members; this can be perceived as fraud. You also shouldn't try to add more into your retirement accounts or other excluded accounts. Your bankruptcy filing service can give you more information.