Tips for a Smoother Bankruptcy
You will need to be honest about what you can and can’t do through personal bankruptcy. In order to be successful financially, you will need to discover better budget balancing techniques. During the bankruptcy process, start to implement these better habits.
Here are a few tips for a smoother bankruptcy:
Don’t throw good money after bad money
Once something is lost, it can’t be recovered. Before you finally file bankruptcy, be careful about every decision you make. As people see their financial ship begin to sink they will feel desperate. Some will grasp at any life buoy thinking it can save them. Loan sharks live off of “vulnerable people.” Avoid the loan sharks. Loan sharks offer debtors more credit knowing they can’t repay it; eventually, the debtor might lose valuable property through default.
Don’t make any rash decisions
The bankruptcy court will determine if you sold, transferred, or gave away valuable property to friends and family to prevent it from being liquidated during the bankruptcy. This could be grounds for fraud if you did not get fair market value. Carefully research what actions you should take with property when filing bankruptcy.
Consolidate your cash and assets before filing bankruptcy
When a bank hears that you have filed for bankruptcy, it will attempt to file a “bank setoff.” A bank setoff is when the financial institution seizes any checking or savings accounts to offset any money owed. Therefore, it is wise to remove your money from these accounts before filing bankruptcy so you can control these assets.
What do you hope to accomplish with bankruptcy?
There are some debts that cannot be discharged through bankruptcy, including taxes and mortgages. You should prioritize what property you want to hold onto, if possible. If you want to keep your house, then find a way to continue to make mortgage payments during the bankruptcy.
Respect the Trustee’s authority
The Trustee assigned to deliberate over your case is likely to have years of experience dealing with bankruptcy cases. The Trustee will punish any fraudulent or dishonest behavior. The court has probably seen every trick in the book. Remember that the Trustee has discretion over what debt will be discharged at the end of the process.
Display the proper attitude
The bankruptcy court officials will expect you to have the proper serious attitude about your bankruptcy. You will need to show responsibility in repaying creditors with the assets that you still possess. You must be contrite and show that you have learned from the process. The court will attempt to control more of your actions while you are in bankruptcy.
Chapter 13 – Be realistic with your reorganization plan
It is wise to be conservative and provide a cushion for unexpected expenses. A lot can change over three to five years.
Organize your financial documents
Make sure that all of your financial documents are accurate:
- Credit agreements
- Repayment history
- Federal income tax returns.
Make sure you know what is supposed to occur at each step of the bankruptcy process
Know what documents are required, what rights different parties have, what authority the trustee has, and what deadlines are approaching. Take control of your bankruptcy as best as you can.