Bankruptcy, like everything else in life, is something that should be carefully planned. It’s not a rash decision to file for bankruptcy. In fact, you may deserve a hearty “congratulations” for taking control of your debt. There’s every possibility that you’ll come out of bankruptcy better off in the long run than you ever would have been otherwise.
However, in order to make sure that you get off on the right financial footing, here are some basic tips to follow before you file for bankruptcy:
1. Pay your house note or rent, not your credit cards or other loans. Get caught up as closely as possible (or, better yet, don’t get behind) on your mortgage so that you can reaffirm that debt and continue staying there if you like where you live.
2. Let your creditors know that you plan on filing bankruptcy. That may be enough to stop the harassment or phone calls even before you pick out your attorney. From the moment you make the decision to file, go ahead and tell them. But you must act quickly so that creditors don’t secure liens against your property.
3. Figure out your monthly expenses. You’re going to have to complete a really detailed worksheet to present to the bankruptcy trustee so that he or she can address any disposable income that you might have.
4. Figure out your assets. These are things that you own free and clear and things that may still have some debt on them. For example, you may own an old pickup outright but only have about $500 worth of equity in the car you drive to work each day. It’s always important to know the sum total of your worth, as that can play into what assets you can keep.
5. Stop acquiring new debt. Put away the credit cards and don’t buy any furniture or electronics on installment payments. The only time it’s acceptable to use your credit cards shortly before you file bankruptcy is if you get into a situation where you literally have to use credit to keep from starving or keep the utilities connected.
6. See an attorney for a consultation. Once you’ve made the decision to file, don’t waste another day. Bankruptcy attorneys have valuable insights about what you will need to do next.
Source: CreditCards.com, “5 Tips For Those Considering Bankruptcy,” Connie Prater, accessed Nov. 03, 2017