Filing for bankruptcy is an everyday occurrence, more common than most people think. If you are in a difficult financial situation and are wondering if bankruptcy is right for you, it helps to understand the process. The following article outlines seven basic steps you will experience should you choose to file bankruptcy. But not every bankruptcy is the same, so be sure to call a professional bankruptcy attorney to learn more about this solution’s potential for you.
- Fully disclose financial information to your bankruptcy attorney. At your initial consultation, inform your attorney about your debts, assets, income, and expenses. Your lawyer will have prepared questions or a questionnaire to ensure nothing is left out. If you don’t feel comfortable disclosing all the facts, do not file for bankruptcy. There are severe penalties in place for those who are intentionally evasive. These penalties include denial of discharge and criminal or civil fines.
- Carefully read the bankruptcy documents prepared by your attorney. While your complete disclosure is essential, you must also review and validate the documents your lawyers prepare based on your consultation. Because you will sign these documents under penalty of perjury, it is up to you to ensure all of the information is correct, and all of your financial data has been disclosed. If you’ve hired a competent bankruptcy attorney, your documents should accurately reflect the information you gave. However, if your attorney’s office made an honest mistake and you sign the papers, you will be liable.
- Obtain a contract from your bankruptcy attorney. By law, bankruptcy lawyers must provide a contract outlining exactly what services they will provide and according to the fee structure. Make sure you obtain an agreement upon hiring professional legal counsel. Review the contract carefully and ask any questions you have. Do not leave anything unclear in your mind. Some attorneys offer flat fees, while others charge an hourly fee. If you are paying a flat fee, ask what services are possible that may fall outside of the fee schedule.
- Take your required courses in a timely fashion. Two courses are typically required from those filing for personal bankruptcy: Credit Counseling and Debtor Financial Management. If you intend to file, credit counseling is a requisite. Your bankruptcy attorney can provide a list of the local companies offering this counseling. Your completion certificate is good for six months from completion. After filing, a second course (commonly known as Debtor Financial Management). You cannot attend this class before bankruptcy is filed, but if you do not file the completion certificate before your case is closed, you cannot receive a debt discharge.
- Provide your bankruptcy lawyer with all relevant documents. You will be required to provide a host of documents to your attorney, including mortgages and deeds, vehicle titles, tax returns, bills and collection letters, copies of paychecks, and bank statements. Your attorney will provide you with guidance as to what is needed. Although it may take some time to pull together these documents, the lawyer can best represent you if you provide them as quickly as possible.
- Put away your credit cards and don’t transfer property. Once you opt for bankruptcy, you should put your credit cards aside and stop using them. If you continue to run up debt, you are providing your creditors or trustee a reason to object to your debt discharge. Similarly, you should not transfer any property once you decide on bankruptcy. Moving property doesn’t mean just selling it – it includes gifting, trading, or otherwise disposing of property. In some cases, property transfer may be okay, but you need to consult with your attorney. Bankruptcy law gives the trustee and your creditors the right to challenge transfers as preferential or fraudulent – even though those activities are legal outside the bankruptcy process.
- Know what property is protected – and what is not. Most bankruptcy cases are “no-asset” cases, meaning the debtor will not lose their property. This is because there are legal debtor exemptions to protect specific property. These exemptions include homes, vehicles, household goods and furnishings, insurance policies and annuities, and bank accounts. Be sure you understand your situation before filing – a competent bankruptcy attorney will advise you on maximizing your exemptions to protect your property.
The above information should give you a great head-start to understanding what happens when you file for bankruptcy. But before you decide to do anything, call the Sarasota law offices of Richard V. Ellis. As an experienced bankruptcy attorney, Mr. Ellis has helped hundreds of individuals and families to get a fresh financial start, and we are here to help.