Preparing for Bankruptcy
Chances are, if you’ve come to the point where you’ve decided to file for bankruptcy, you’ve likely tried countless other options first, including cutting back on spending, negotiating with creditors, or consolidating your debt. Now that you’re ready to take the plunge into bankruptcy, you’ve got to prepare yourself and your finances to ensure you follow all legal requirements while also making sure you fully benefit from your filing.
It is vital to get help with preparing for bankruptcy or filing a petition with the courts to ensure a smooth process. Contact our practiced legal team at The Orantes Law Firm. We proudly serve Los Angeles County and Orange County, California.
How to Prepare Filing for Bankruptcy
The months leading up to your bankruptcy filing are crucial to get right because they will impact the court’s decision about your petition and affect the ultimate outcome.
First, you should ensure that you’ve filed all your required tax returns and made any payments. Declaring bankruptcy doesn’t discharge all your debt and even if you’ll be able to wipe out consumer debt like credit cards or medical bills, you won’t be able to get rid of tax debt. You should also pay off all necessary bills to the best of your ability, then stop automatic payments on anything else. When you have bills on autopay, there can often be a lag time between when your automotive stay is issued and creditors stopping collections, so you can prevent any issues down the line by being proactive.
Lastly, you’ll have to thoroughly and honestly document all your income and debt information. It’s extremely important that any information you hand over to the bankruptcy court is accurate and that you’re not trying to hide anything. If you are caught falsifying information, you run the risk of legal consequences.
What Not to Do Prior to Filing
While it’s important to know what you should do, it’s just as important to know what not to do before filing for bankruptcy.
First, you shouldn’t keep paying off debt that will eventually be discharged. Instead, focus your payments on your financial obligations that you’ll still be responsible for, but don’t do so at the expense of other spared assets. For example, most retirement savings will be protected during bankruptcy, so you should never use funds from those accounts to pay down debts. Furthermore, the debts you do continue to make payments toward should only be well-established and credible (meaning you shouldn’t selectively pay off loans from friends or family while ignoring your legitimate responsibilities). You should also be consulting with your attorney at all times and following their advice regarding your creditors. You don’t want to wait until the creditor has won a judgment to take action.
During the months leading up to the filing, don’t acquire any new debt or take out any new lines of credit, as this will affect your petition. Additionally, you should avoid transferring any funds or property around and leave your assets alone as much as possible.
How Legal Counsel Can Help
Whether you’re filing chapter 7 or chapter 13 bankruptcy, it’s strongly recommended that you only pursue this with the help of an experienced bankruptcy attorney. Your lawyer can help assess your situation, help you prepare your documentation, file forms on your behalf, troubleshoot any difficulties, and advise you on the best course of action. Finally, if you are asked to appear in court, they will help you prepare and represent your interests before the judge.
If you’re anywhere in Los Angeles County or Orange County and are ready to take the next step in filing for bankruptcy, reach out to our team at The Orantes Law Firm for help.