For whatever reason, you are thinking about bankruptcy assistance for Chapter 7 or Chapter 13, covering about 99% of the people out there, is in your future. Here are some tips to save you some pain and to avoid wasting money.
DO: Save up a little bit of money (at least $1000). You are going to have to pay an attorney. The sooner you save the sooner you can file. Also, to prevent from filing bankruptcy again, you need to start saving more and this is a good way to start.
DO NOT: Charge up your credit cards or take out unsecured loans. If you are going to file bankruptcy and take out loans you have no intention of repaying, this is fraud. Also within the bankruptcy code it is possible for a creditor to challenge the discharge ability of a debt if the debt was taken out close to the time of bankruptcy.
DO: Get a car loan if you need a car. I generally do not advocate getting loans to buy a car. However, if you need a newer car (not want) it will be easier to get, usually, before the bankruptcy assistance. If not sure consult your bankruptcy lawyer.
DO NOT: Cash out your retirement plan, IRA, pension, etc. Unless you need this money to eat, do not cash out the retirement plan? First, the money is going to be taxed, a lot. Up to 40% and maybe more. You will not lose this money in the bankruptcy filing. Your bankruptcy attorney can use various methods to protect it. This is what you are paying him for.
DO: Figure out which debts may survive the bankruptcy. There are the obvious ones, like school loans, taxes for most people, child support payments and the not so obvious like traffic tickets. There are some debts you get to decide on, like house and car debts. Decide what you want and what you do not if there is a choice. If unsure, once again talk to your bankruptcy attorney.
DO NOT: Give your stuff away or sell your stuff. You are not the first person to think of this. You are not the first person to bring this idea to me this week. There are laws to reverse the transfers, having existed federally for 3 years and in states like California for 4 years. This means that ’68 Mustang you “sold” to your Uncle Larry for $500 will be seized by the trustee. What is even sadder is that if you have ownership of the items, there are several legal and usually cost-free methods to keeping your stuff. Bankruptcy is designed to give you a fresh start, not strip you of all your possessions.
DO: Create a budget based on your life after bankruptcy. If you do not have enough money to live on after your debts are discharged in bankruptcy, then bankruptcy is not going to solve your problem. To live on also includes savings to prevent future a bankruptcy filing.
DO NOT: Believe what you read on the internet about bankruptcy (except for what I write). You can find hundreds of horror stories about people who had a bad bankruptcy experience. These fall in to three categories: people who did it themselves, people who used a paralegal, and people who used a bad attorney. The first two categories have bad outcomes because they are entering a realm, for the first time, against people who do this dozens of time a month. You are not an expert the first time and so no wonder you had a bad outcome. As to using a bad attorney, this can be tougher to spot. In my opinion, a good bankruptcy attorney will meet with you personally; explain your options and the outcomes the options. If the attorney just says Chapter 7, and that is it, run. There are always option, including doing nothing. The attorney should also pepper you with questions about what you own, your financial situation—past, present, and future, and any recent financial transactions. This is a bare minimum for the first meeting. If you are unsure, talk to several. (Or save yourself the headache and just give me a call.)
This is not a comprehensive list, but a good start on things to think about as you prepare to file bankruptcy and for this purpose. Stephen Labiak will help you in civil cases, medical malpractice, personal Injury, consolidation and bankruptcy issues. Our Law Firm will provide you best attorneys to deal with all your legal problems. Our expert lawyers also help in bankruptcy chapter 7 and chapter 13. We are currently serving in entire central valley which includes Fresno, Visalia, Hanford, Madera Clovis, and Tulare.