Friday, October 28, 2011

The 5 Most Important Things to Know When Filing a Chapter 7 Bankrutcy

  1. Hire a Bankruptcy Attorney.
Don’t think that you can do it yourself, or that a petition preparer knows as much about bankruptcy as an attorney. Most bankruptcy lawyers give free consultations nowadays. Ask questions and get advice on other alternatives. Besides getting competent legal advice from an attorney, make sure that the attorney you hire will attend the creditors meeting with you. These days many bankruptcy attorneys get others to cover meetings for them. Since this is an important, mandatory, and very personal matter, it will put you more at ease if the attorney you hire will attend the creditors meeting with you. All too often I have encountered bedraggled clients at creditors meetings, asking me if I am covering for another attorney. They don’t already know that the meeting will take only about three minutes, and they are upset, afraid and confused because they are supposed to meet someone who they do not know, and they don’t know what to expect. Hire an attorney who will give your case the personal attention you deserve.

  1. Get your documents together.
Get the most recent statements from each creditor, copies of the deed to real estate and vehicle titles, pay stubs for at least 60 days, income tax returns for the last 3 years, bank statements, statements from 401k, pension, or other retirement funds. You also need a certificate from an approved consumer credit counseling agency. Organize everything in one place. Have a good idea of what your income has been for the last five years, and what your expenses have been, before you see an attorney.

  1. Cut up the credit cards.
Creditors can come after you for purchases made on credit cards just prior to filing bankruptcy, under certain circumstances. So, it is important to stop using credit cards at least a few months before filing.

  1. List everything you own and everything you owe.

You cannot pick and choose which debts you are going to go bankrupt on. On the other hand, you can choose to reaffirm a debt and most people want to reaffirm mortgages and car loans. You must list every creditor you owe money to, even the family member who loaned you money.  In addition, you have to list everything you own, with fair market values. Don’t put an outrageous price on something, just list what you would be willing to sell it for, garage sale values are probably best.

  1. Know when it will be filed.
You want to stay in close contact with your attorney’s office after you have given them the questionnaire answers.  It is very important to make sure that you don’t have to pay some monthly bills twice.  For instance, if you have a number of checks that have not cleared your bank account, the money in the account at the time you file can be claimed by the trustee. You do not want to have to pay your utilities twice in that month, or your mortgage or car loan. So, you need to make sure that your bank account has a close to zero balance on the day your Chapter 7 is filed.

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