Tips For Filing Bankruptcy


The financial sector has boiled to the point where banks are not lending and credit is not easily obtained for people with excellent credit or bad credit. The alignment of these events have now forced people to take stock of their financial affairs and look into filing bankruptcy to either remove unsecured debt or to try to remove their responsibly to their mortgage companies for homes where they owe more than the home is worth. Home values which may take decades for owners to see the value return on the home if it ever does. It is no surprise that bankruptcy forums are rampant with questions and inquiries are being made about chapter 13 bankruptcies and Chapter 7 bankruptcy and what people need to do to remove the debt they have accumulated over the years.

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It should also come as no surprise that bankruptcy filings have continued to increase in 2008 and 2009 since the current recession was publicly recognized by the U.S. government and banks started receiving bailouts. The amount of foreclosures and increased unemployment rates has almost forced people to truthfully look at their current financial status. People who practiced risky behavior trying to leverage investments on credit that was easily obtained are now being affected in ways that has not been seen in 25 years by means of banks calling loans and credit card companies increasing low interest rates to double digit rates on lines of credit. The financial sector has not experienced this type of anxiety since the great depression. In preparing for bankruptcy consumers should consider several things before jumping into filing for bankruptcy. Consideration needs to be given on several levels. Preparing for bankruptcy is also called bankruptcy planning and contrary to popular belief it is not illegal to prepare for bankruptcy it the responsible thing to do.

To begin to plan you need to immediately identify three things. You need to take into account your assets, debts and you current household income. There are exemptions for retirement funds so this can be exempted through federal and state courts. However, if you withdraw a large amount from your retirement account this will affect your ability to file. In addition, if you have a home with a lot of equity you will either be forced to sell the home or you will have to file chapter 13 which puts you into a payment plan for 3-5 years based on a percent of the debt. In essences, you can pay back all of the debt in a chapter 13 or you can pay a percentage back. The debts versus assets play a major role in deciding which chapter you qualified to file. The best chapter is to file Chapter 7 and eliminate almost off of your debts while keeping your property.

The house household salary also plays one of the major roles in deciding what type of case you will be. The definition of a case means asset or no-asset. This means you do you have enough assets to liquidate and pay your creditors (chapter 7). Hopefully, in this case you don't have sufficient assets and your household salary is not above the median for your state. When planning bankruptcy you want to file during prior to 6 months of making any large purchases or receiving any large bonuses or large sums of money. Any of these can affect your case and force you into repayment.

While planning you will want to print all credit card statements for two years in case you are audited, make no large purchases, have a copy of two years of tax records prior to filing, copy of drivers license, tax ID card and have not received large bonuses in the past 6 months and be below the median income for your state. You should have at least three attorney consults and be wary of attorneys pushing you to file chapter 13. You definitely want to remove your debt in a chapter 7 bankruptcy Your attorney may also tell you not to worry about credit card statements. This will most likely be true. However, if you are randomly audited by the US Trustee rather than the local trustee you will need to provide these statements to him or her. It is better to not need these documents then to need them. You will have very little luck on receiving any help obtaining documents from the creditors you filed on and all your online accounts will have been disabled as soon as you file.

In conclusion, visit bankruptcy forums before filing, open a new checking account and do not leave money in any accounts that you are filing bankruptcy on because they will automatically and legally take any money you have in your account by means cross collateralization from an agreement you most likely signed when you obtained credit.


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