5 Tips to Follow When Preparing to File for Bankruptcy

 Posted on November 02, 2021 in Pre-bankruptcy Planning

Debt is an issue that affects many people in the United States, and if your family is struggling to address ongoing expenses while also paying the debts that are owed, you may be considering bankruptcy. This option can provide you with relief from your debts and allow you to receive a fresh start and maintain ongoing financial success. As you prepare to file for bankruptcy, you will want to take the correct steps to ensure that all of your debts will be addressed properly, while also making sure you do not do anything that will affect your ability to receive debt relief.

Steps You Can Take to Protect Yourself When Preparing for Bankruptcy

• Gather financial information - You will need to fully understand all of the debts you owe, as well as the assets you own, all forms of income, and your ongoing expenses. By gathering statements from creditors and checking your credit report to uncover any debts you may not be aware of, you can be sure all of your debts will be included when you file for bankruptcy. Depending on whether you will be filing for Chapter 7 or Chapter 13 bankruptcy, you will need to understand whether you will be required to turn over any non-exempt assets or how much disposable income you may have to put toward a repayment plan.

• Do not take out any loans or make large purchases - While bankruptcy will allow you to discharge debts, this does not mean that you should take out new debts with the expectation that you will not need to repay them. If you acquired any debts within 90 days before filing for bankruptcy, aside from those that may have been necessary to pay basic living expenses, the creditor may claim that you have committed bankruptcy fraud, and you may not be able to discharge these debts.

• Do not attempt to hide or transfer assets - You must report all of the assets you own during the bankruptcy process, and in a Chapter 7 bankruptcy, you may be required to turn over certain assets to be liquidated and repay your creditors. It is illegal to attempt to conceal assets to avoid having to turn them over during bankruptcy proceedings. If you attempt to transfer assets to friends or family members or use other methods to hide assets, you may not be allowed to complete the bankruptcy process, or you may even be subject to criminal prosecution.

• File all required tax returns - Your tax returns will be used to determine your income and assets, so you will want to make sure that you have filed your taxes correctly for the past few years. You will not be able to proceed with the bankruptcy process until you are current on your tax returns. While you usually will not be able to discharge tax debts, any taxes or penalties you owe may need to be considered alongside your other debts.

• Understand your credit counseling requirements - You will be required to take a credit counseling course before filing a petition for bankruptcy, and a debtor education course is also required before your debts can be discharged. By understanding the steps you will need to take to meet these requirements, you can make sure you are fully prepared to begin the bankruptcy process.

Contact a San Antonio Bankruptcy Attorney

If you are considering bankruptcy, Law Offices of Chance M. McGhee can help you better understand the steps you will need to take, and we will ensure that you meet all of your requirements during the bankruptcy process. Contact our Boerne bankruptcy lawyer at 210-342-3400 to schedule a free consultation today.

Sources:

https://www.wikihow.com/Prepare-to-File-Bankruptcy

https://www.uscourts.gov/services-forms/bankruptcy/credit-counseling-and-debtor-education-courses