How to Approach Filing for Bankruptcy

Friday, August 31, 2018, 6:00 PM | Leave Comment

Living with crushing debt is not easy, but at the same time so is filling for bankruptcy. While the latter is more due to the fear the unknown, it is surprising how many people put off filing for bankruptcy – even when it is the only option left.

Besides the fear of filing for bankruptcy, another reason why people delay filing is not knowing how the various forms versions of protection will apply to their case. The best way to get around this is by educating one’s self to the various types of bankruptcy and what they entail.

Beyond this, one might also want to talk to various attorneys to learn what they would recommend. When it comes to bankruptcy, knowledge truly is power and with that in mind here are some tips on how to approach filing for bankruptcy.

  • First Things First

    Filing for bankruptcy means that your personal finances are going to go under the microscope. This includes detailing your assets (i.e. the stuff you own) and your liabilities (i.e. the money you owe). Given this scrutiny, one of the most important things you can do is to make sure you DO NOT transfer any assets to someone else for at least 12-months prior to filing.’

    The reason is simple, creditors are going to be on the lookout for these transfers as they are tantamount to hiding assets. As such, you might want to delay filing for a few months to make sure any asset transfers are appropriately aged. Doing so will ensure that you won’t run into problems later.

  • Death and Taxes

    For many people in a financial spiral, the option of paying their taxes by credit card might seem like a godsend. However, you want to be very wary of using this option as most states won’t discharge the portion of credit card debt tied to the taxes you’ve paid.

    Remember the saying about death and taxes as bankruptcy can’t help you to avoid either.

  • Choosing the Right Lawyer

    According to the Raleigh bankruptcy attorneys at Bradford Law Offices, ‘while individuals are technically allowed to file bankruptcy without a lawyer as pro se litigants, it is almost always in your best interest to hire an attorney to handle your case.’

    As such, you will want to have a lawyer on your side. Not only will they help you to negotiate with creditors, they will also guide you through the process. This is important as various forms of bankruptcy (i.e. Chapter 7, Chapter 11, Chapter 12, and Chapter 13) come with different strings attached.

    Unless you are a bankruptcy attorney, then you don’t want to assume you know the ins and outs and as such, you will need to have an advocate in your corner. A couple of things to look for when choosing the right attorney are a) do they have experience in the field and b) how comfortable do you feel about working with him or her. When it comes to the latter this will be important as filing for bankruptcy isn’t just about numbers, it is an extremely personal and sometimes contentious process.

  • Don’t Let Your Bankruptcy Define You

    One of the advantages of the bankruptcy laws in the U.S. is that they allow people to start over. This is opposed to countries where people who filed for bankruptcy can never open a bank account or even be a director of a company.

    The key here is that you don’t want to let your bankruptcy to define who you are. Instead, think of this as an opportunity to learn from your mistakes. This is important and one way to approach this is to find a way to walk away from it all after you have made your initial filing.

    Doing so will not only allow you to recharge your batteries, it will also get your mind to start thinking about life after bankruptcy.

  • Home is Where the Heart is

    For most people, they won’t have to worry about losing their home in bankruptcy. This is because most cases allow for what is known as a ‘homestead exception’. However, you don’t want to assume that this exception will apply in your case. For example, if you are lucky enough to have more than one home, then you will need to choose which one to keep.

    In addition, the size of your mortgage might come into play. While you might be able to renegotiate the terms of your mortgage with your lender, you will want to have your lawyer help you through this process.

    Home might be where the to hear is but when it comes to bankruptcy you want to make sure that you’ve taken the right steps.

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