Bankruptcy does not have to be complicated. It is normally an easy process where you keep your car and home, but do not have to pay any debt. Rebuilding credit has gotten so much easier, there is no reason not to do the government program of bankruptcy.
Bankruptcy or Debt Consolidation
A lot of folks want to avoid bankruptcy so badly that they agree to repay some or most of their debt by debt consolidation or debt management. This is usually unsuccessful. The debt consolidation programs simply stop paying the debt and ask the credit company to accept less. During this time, you are making monthly payments to the debt consolidation company. It is easy to see that simply not paying any of your debt in bankruptcy is a much better option. Read more.
Other Options to Avoid Bankruptcy
Find a Bankruptcy Lawyer
Chapter 7 Bankruptcy or Chapter 13 Bankruptcy
Bankruptcy Exemptions – Keep Car and House in Bankruptcy
Bankruptcy Procedure – Bankruptcy Classes and Next Steps
How to File Bankruptcy Checklist
Bankruptcy 341 Creditor Meeting
Bankruptcy Discharge
Life After Bankruptcy Rebuilding Credit
Filing for bankruptcy likely will be one of the most important decisions you make in your life, at least from a financial perspective. Because very few people have experience with bankruptcy before they file, many are bewildered by the process and have a lot of questions about exactly how they should prepare. Although every situation is different, there are a few very common “do’s” and “don’t’s” of preparing to file for bankruptcy, outlined below.
Do:
Find a bankruptcy attorney
The first thing you should do if you are considering filing for bankruptcy is to consult a bankruptcy attorney. Although it is possible to go through the bankruptcy process without an attorney, doing so can be exceedingly confusing, risky, and emotionally draining. Even if you decide not to go through with filing for bankruptcy, a bankruptcy attorney can help guide you through that decision and counsel you on the best way to rectify your financial situation. If you find that you simply cannot afford an attorney under any circumstances, there are many do-it-yourself resources available to you. Just make sure that you’re getting the most recent editions available, as bankruptcy laws do tend to change.
Tell your bankruptcy attorney everything
For most people, bankruptcy is an embarrassing situation to find oneself in. However, it is better if your attorney knows everything about your situation so that he can help you the best he can. Also, anything that isn’t listed in your petition may not be discharged, so it is in your best interest to be as honest and comprehensive as possible.
Learn how to live on a smaller budget
Bankruptcy will affect your financial situation significantly and will mean that you will have to do without certain things for a while. Although living on reduced means will be hard, bankruptcy is a second chance at a new financial life, so learning to live within your means will be extremely beneficial later.
Maintain payments on any loans for which you wish to keep the collateral
If you have a mortgage or a car payment or any other secured debt and you want to keep the collateral, keep making payments on those accounts and attempt to remain current on the payments.
Close bank accounts at institutions at which you also owe debts
If you a have a credit card or secured property at the same bank where you have a checking or savings account, the bank may withdraw funds from your bank accounts to cover the debts owed. Thus, you’ll want to close all accounts at institutions where this is the case.
Keep all documents relating to your bankruptcy
You should keep all court documents, correspondence with your attorney, and the discharge that is mailed to you at the conclusion of your case for at least ten years, as this is the length of time that a bankruptcy stays on your credit record.
Don’t:
Rush into bankruptcy too quickly
When you’re in a precarious financial situation, you want to try to do everything you can to pay your debts without resorting to bankruptcy. Why? Because you are only allowed to receive a bankruptcy discharge every so often. For example, you may only receive a Chapter 7 bankruptcy discharge:
- Once every eight years, or
- Six years after a Chapter 13 bankruptcy filing
If you find yourself facing an even more serious financial problem during these waiting periods (such as unemployment, an eviction, foreclosure, or car repossession), you won’t be able to file again.
Borrow money or use credit cards
Once you’ve decided that filing for bankruptcy is the best option for you, you should immediately stop borrowing money and using your credit cards. The reason why you should do this is that borrowing money or using credit cards after you have made the decision to enter bankruptcy protection is considered to be fraud. Also, note that this includes borrowing money from family and friends. If any of your family or friends want to help you out financially after you’ve decided to file for bankruptcy, make it clear to them that the money they are giving you must be a gift, not a loan.
Pay any unsecured debts
As a general rule of thumb, you’ll want to stop paying any unsecured debts (mainly credit cards) unless you are advised to do so by your attorney. You’ll still have to pay your rent, utility bills, car payment, health insurance, and other essentials. In particular, don’t do any of the following unless your attorney advises you otherwise:
- Repay friends or family members who made unsecured loans to you.
- Pay some unsecured creditors but not others within the three months prior to filing bankruptcy. If you stop paying one of them, then stop paying all of them.
- Transfer any property, cash, or anything else of value to anyone else to attempt to get it out of your name. This is considered fraud and can land you in jail.
- File when you are about to receive substantial assets
You might not want to file for bankruptcy if you are expecting to receive any kind of financial windfall in the near future. This includes inheritances, large income tax refunds, a settlement from a lawsuit, or the repayment of a loan you made to someone else. Once you receive these funds, you might not need to file for bankruptcy any longer.
Provide inaccurate, incomplete, or dishonest information
You are required to fill out your bankruptcy paperwork with complete and accurate information about all assets, debts, income, expenses, and financial history, under penalty of perjury. If you knowingly misrepresent your information, you could be subject to criminal penalties for bankruptcy fraud. Even honest mistakes can cause unnecessary delays in your case.
Contact a Las Vegas Bankruptcy Attorney
If you are considering filing for bankruptcy, it is important that you speak to an experienced and knowledgeable bankruptcy attorney who understands the legal system and can help you avoid potential pitfalls. Contact the Law Office of Erik Severino today at 702-997-4149 to schedule a free consultation.