How do I Prepare for a Bankruptcy Filing?
Even before you decide to file, there are certain steps you must take once you see the possibility of bankruptcy in your future. Whether to learn more about filing bankruptcy is the first decision you need to make. Are you paying your bills when they are due? If not, can you resolve the problem without borrowing money? Borrowing money creates one more bill to pay; borrowing against the equity in your home or from your 401K will not solve your problem, and you will be using a resource for the future that can be protected from your creditors. When you see the possibility of filing bankruptcy coming, consider taking these steps:
- Consult with a financial adviser, accountant, or credit counselor to see if there’s a reasonable alternative to bankruptcy.
- By “credit counselor” I mean a non-profit organization whose business it is to assist people, on a low or no-fee basis, in determining whether debt can be managed or if bankruptcy should be considered.
- There are many, many companies who advertise debt consolidation or debt relief services for a fee, and who will propose a plan for negotiating paying off debt with substantial discounts. You should be cautious about such plans. Many debt relief schemes do little for a very large fee and often result in the same or more debt.
- Three resources for reputable debt consolidation advice that you should consider are:
- National Foundation for Credit Counseling
- Federal Trade Commission
- U. S. Department of Justice’s U. S. Trustee Program. The U. S. Trustee has a listing of approved credit counseling agencies that provide a one-hour session of credit counseling, which is required before filing bankruptcy. These agencies are regulated, but their service is limited to helping you determine whether you have a reasonable alternative to bankruptcy.
- Consult with an experienced bankruptcy attorney. To find an attorney, refer to my article, How do I choose a bankruptcy attorney? Knowing what bankruptcy does and what the bankruptcy process is might help you avoid bankruptcy, but it always prepares you for some important aspects of bankruptcy like How Often May You File Bankruptcy? and Can I Keep My Property in Bankruptcy?
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The statements of law made here are general statements of law, effective at the time published and subject to change from time to time. These statements are not intended, nor may they be construed, to be applicable to any particular set of factual circumstances nor to any particular person. I recommend that all readers seek the assistance and advice of an experienced bankruptcy lawyer for guidance in their particular circumstances.
© Copyright 2013 David C. Hoskins, licensed Colorado lawyer