What to Do Before, During, and After Filing for Bankruptcy

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An attorney reviews bankruptcy documents with a client

If you are overwhelmed with debt and struggling to make ends meet, you may be considering bankruptcy as a method for regaining control over your finances. While bankruptcy can be a great way to wipe away debt and start fresh, it is also a very involved process that requires careful planning. Knowing what to do before, during, and after filing for bankruptcy will ensure that you get the best outcomes possible. 

How to Prepare for Bankruptcy

Filing for bankruptcy can take several months to complete, which is why it’s crucial that you properly prepare for your case. Not only will this make the entire process easier, but it will also ensure that you have everything you need to succeed. Before filing for bankruptcy, remember to:

Protect Your Assets

When dealing with serious financial struggles, many people are tempted to make big decisions to try and find immediate relief. However, you will want to be careful about how you manage your money and assets if you plan to file for bankruptcy. The decisions you make prior to filing will be taken into consideration by the court and could influence your final outcomes. To set yourself up for success, DO NOT:

  • Use retirement funds to repay debts
  • Max out your credit cards or take on more debt
  • Sell or transfer property for less than its fair market value
  • Fail to file your tax documents

Consider Other Debt Relief Options

Bankruptcy can be a great tool for individuals with an insurmountable amount of debt. However, it’s also a challenging process with long-lasting consequences. Depending on which chapter you file for, bankruptcy could remain on your credit report for 7-10 years and impact your ability to make future purchases. That’s why you should only use bankruptcy as a last resort. If you are facing any of these challenges, then bankruptcy may be the best option for you:

  • You are at risk of losing your home
  • You have bills in collections that you can’t pay off
  • You’ve had a serious life event such as illness or job loss

Attend Pre-Bankruptcy Credit Counseling

Credit counseling is mandatory for individuals who are planning to file for bankruptcy. These sessions are intended to help people analyze their financial situation and identify ways to repay debts without filing for bankruptcy. At the end of a session, you will be given a certificate that you must submit to the court alongside your bankruptcy forms. 

Pre-bankruptcy credit counseling sessions can take place in person, online, or occasionally over the phone. Most only require a few hours to complete. When selecting your session, make sure that you are choosing from an approved credit counseling agency that will provide you with a certificate of completion that you can submit to the court. 

Determine Which Chapter to File Under

Once you’ve decided that bankruptcy is right for you, it’s time to determine which chapter best fits your situation. Though there are several different chapters to choose from, most people end up filing for one of these two:

  • Chapter 7 is meant for lower-income individuals with limited assets. If you successfully file for this chapter, some of your assets will be liquidated and most or all of your unsecured debts will be discharged. To qualify for this type of bankruptcy, you will need to pass a “means test” that ensures your income is within the approved range.
  • Chapter 13 is designed to help higher-income individuals with more assets. This type of bankruptcy is known as “reorganization” because it helps you establish a repayment plan with your creditors rather than discharging your debt. Though some unsecured debts can be eliminated, most will be added to a payment plan that you will repay over the next 3-5 years. 

Contact a Bankruptcy Attorney

If you are struggling financially, then the idea of spending money on an attorney may not seem very appealing. However, filing for bankruptcy can be a difficult and intricate process. Small mistakes could lose money or even jeopardize your case. Working with an experienced attorney will not only save time and stress, but also ensure that you are getting the best outcomes possible. If you are considering bankruptcy, contact the experts at OlsenDaines to schedule a free legal consultation.

What to Do During Your Case

Your attorney will guide you through the bankruptcy process and ensure you have everything you need for a successful case. However, it’s helpful to know what to do to ensure your case goes smoothly. Here are some tips to keep in mind when filing for bankruptcy:

  • Keep track of all paperwork, including communications
  • Let your attorney handle communication with debt collectors
  • Be 100% honest and transparent throughout your case

Recovering From Bankruptcy

Filing for bankruptcy is just the first step in your path to financial recovery. After your case, you will need to make smart decisions to stay on the right track and repair your credit. Though this can feel like a daunting process, there are some tips you can follow to speed up your financial recovery after bankruptcy:

Attend a Debtor Education Class

Debtor education classes are typically required near the end of your bankruptcy case. These courses are designed to teach you strategies for remaining financially healthy after being granted bankruptcy. Depending on your specific circumstance, you may be required to submit proof of completion to the court prior to being discharged. When selecting a course, be sure to choose one delivered by an approved provider.

Make All of Your Payments

Everybody’s situation will look different after bankruptcy, but it’s important that you work with your appointed bankruptcy trustee and diligently stick to any payment plans that you’ve set up with creditors. You will also want to make regular payments for debts that are not discharged through bankruptcy, such as income taxes or child support. Staying on track with these payments will ensure that you remain on the path to long-term financial success. 

Prepare Your Taxes

Many people overlook their tax situation when filing for bankruptcy. However, taxes are still a requirement that you will want to stay on top of every year. After your case, you will also want to create a plan to repay any tax debt that is still outstanding. 

Begin Repairing Your Credit Score

Repairing your credit score after filing for bankruptcy can be a long and daunting process. However, with patience and the right strategy, it doesn’t have to be overwhelming. Some good ways to rebuild your credit score after bankruptcy include:

  • Paying all of your bills on time
  • Opening a secured credit card
  • Having your utility bills reported
  • Monitoring your credit report

If you are struggling with debt and want to find relief, bankruptcy could be a great way to get a fresh start. At OlsenDaines, it’s our goal to make the process as easy and stress-free as possible. With over 40 years of experience, our skilled attorneys can examine your situation and help you find a solution that works. We value honesty and transparency, which is why we disclose our costs and fees from the very beginning and offer a variety of payment options. To start your journey to financial freedom, contact us today and schedule your free legal consultation!

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