Five Tips Before Filing Bankruptcy

Cairn If you are considering filing bankruptcy it’s likely that you have already been through significant struggles and you are looking for ways to avoid any more bumps in the road. Regardless of the chapter your filing under, here are a few tips that will help your bankruptcy case go more smoothly. Whether you end up filing bankruptcy or not, following these tips can help you and others understand where you are at financially.

  • Get the Timing Right. What is driving your bankruptcy filing? Are you being garnished? Is a foreclosure sale imminent? Have collection calls pushed you over the edge? Perhaps it was a medical event and you just see the writing on the wall. Whatever your motivation, there may or may not be time to prepare. Though no one ever wants to file bankruptcy, sometimes a little advance prep can make the difference between your experience being awful or awesome. When necessary, we can file immediately… meaning today.
  • Don’t Sell, Transfer, or Give Anything Away. Once you think you might be close to filing, don’t mess up the timing by getting rid of anything that would otherwise be listed as an asset in your bankruptcy case. Selling things for less than they’re worth, giving away expensive gifts, paying a friend or family member money or property you owe, or paying off an account to stay on good terms with your bank are all transactions that can be voided and unwound by the Bankruptcy Trustee once the case is filed. If you think you might want to clean up a situation before filing, get legal advice first. In extreme situations, such transfers can carry severe consequences, including denial or revocation of a discharge and potential criminal charges and fines. The Trustee’s power to claw back a pre-filing transaction can reach back as far as a year or far longer, depending on the circumstances.
  • Pull Your Credit Report. Whether it’s a bank, family, or friends, you will swear under oath that all known creditors have been listed in your bankruptcy documents. Your attorney should pull your credit report, but if he or she doesn’t, pull it yourself and confirm, at a minimum, that each of the creditors on the report are listed in your bankruptcy case. Remember that many medical creditors do not report to credit bureaus, so those will require additional legwork on your part. Creditors who do not receive notice of the bankruptcy case may not be discharged and might be able to still pursue you after your bankruptcy case closes.
  • Keep Good Records. Especially in more complex cases, but even once in awhile in simpler ones you may need to document your financial condition, assets, etc. In fact, once filed, you will owe an obligation to document your financial circumstances for creditors and any failure to do so is grounds for denial or revocation of discharge. So, anticipate the obligation and position yourself to be able and willing to prove why you deserve a bankruptcy discharge.
  • Be Honest. Bankruptcy is not the place to try and game the system. Transparency is key. And, our advice is only as good as the information you give us. So, it is vitally important that clients be up front and honest with their attorney. We simply cannot help a client plan or prepare a successful case when the issues are unknown or moving.