Checklist: What to Do Before Filing Bankruptcy

Posted by William Kain on October 9, 2014 at 8:00 AM
William Kain

what_to_do_before_filing_bankruptcyDo you know what to do before filing bankruptcy? Most people know very little about the bankruptcy process, unless they’ve been through it firsthand. The only information an average person has about bankruptcy is what is in the media or what other people are saying. One of our objectives is to educate individuals this process, including the steps that should be taken before filing bankruptcy. We believe that if you know what to do before filing bankruptcy, your concerns and stress about the entire process will lessen significantly.  

The list below gives you a series of actions to take before bankruptcy; however, there is one caveat – each bankruptcy case is unique. With that being said, some the following may not pertain to your experience. During a free consultation, an attorney can discuss these items, in addition to other things that you should do before filing bankruptcy, based on your unique financial situation.

1) Stop Automatic Payments

If you have scheduled automatic payments with some of your creditors, you should take steps to stop those payments now. Because it could take a month or two for your request to stop payment to process, it is better to do this a month or two before filing bankruptcy. In addition to notifying your creditors to stop automatic payments, contact your bank and request the same.

2) Move Funds in Bank Accounts

If you owe money to the bank where you have an account (i.e. savings account, checking account, etc.), you need to withdraw those funds and deposit them into a new account at a bank where you do not owe money. Leaving funds in a bank where you owe money may result in the bank seizing those funds to pay your debt.

3) Learn About the Bankruptcy Process

Knowledge is power. The more that you understand about the bankruptcy process, the calmer you will feel as you go through each step. You can learn about the bankruptcy process by downloading our free eBook, “What You Can Expect During a Bankruptcy Consultation as well as reading some of our blogs.” They provide valuable information about the bankruptcy process, how you can prepare to file bankruptcy and what you can expect after filing bankruptcy.

4) Complete an Approved Credit Counseling Course

Every individual who files for bankruptcy relief must complete a brief a credit counseling course offered by a company approved by the United States Trustee. Once you complete the course, you will receive a certificate that must be filed with the bankruptcy court when you file your bankruptcy case. These certificates are only valid for 180 days from the date of the certificate; so it is important to complete your course within an appropriate time frame.

5) Determine the Value of Your Key Assets

You will be required to list the value of your assets on your bankruptcy schedules. If you do not have a formal appraisal of your home or your vehicle, you can research the current value of these assets by checking online websites such as NADA, Kelley Blue Book, Zillow and Trulia. The value is based on what you could receive if you were to sell the asset today. Your attorney will ask you the value of your assets during your consultation in order to determine your best bankruptcy option.

6) Decide if You Want to Keep or Surrender Assets

If you have assets that are secured by liens (i.e. house, vehicle, boat, etc.), you can choose to continue paying that creditor to keep the asset or you can part with the asset and have the debt forgiven. In some cases, a debtor will decide to surrender an asset because they cannot afford to continue the payments or the value of the asset is less than the balance of the lien.

7) Locate Your Social Security Card

You will be required to produce your Social Security card when you attend your First Meeting of Creditors. If you have lost your Social Security card, you should request a duplicate card early on in the process because it takes several weeks to receive your new card.

8) Locate Your Tax Returns

Under the Bankruptcy Code, you are required to provide a copy of your most recently filed tax returns to the trustee at least seven days prior to your hearing. If you do not have a copy of your most recently filed tax returns, request a copy so that you will have them at the time you need to provide them to the trustee.

9) Start Saving Your Pay Advices Now

In order for the trustee to verify your income, you must file copies of your recent pay advices (i.e. paycheck stubs) or other proof of income with the court when you file your bankruptcy case. You should begin saving your pay advices each pay period, if you do not do so already.

10) Gather Copies of Any Divorce Orders and/or Domestic Support Orders

If you are divorced and/or you have been ordered to pay child support or alimony, you will need to provide copies of the final orders to your bankruptcy attorney. Your trustee may also request copies of these orders for review.

Taking these ten steps before filing for bankruptcy will help smooth out the process for you and make things easier when you meet with an attorney. The next step, if you haven’t taken it already, is to sign up for a free bankruptcy consultation to further learn what your options are to get out of debt and get your life back.

Sign up for a Free Bankruptcy Consultation

Topics: Bankruptcy