Bankruptcy is a tool you can use in the situation where you are no longer able to pay your debt. It is a legal process that will help you liquidate your assets and create a repayment plan, to pay back all your creditors.
If you are thinking of filing for bankruptcy, or if the court has ordered you to do so- here are a few tips to get you started.
Tip #1- Hire a Lawyer
Do not wait till the last minute to hire a lawyer. The time to hire a lawyer is when you start thinking about filing for bankruptcy. A lawyer can help you figure out whether you need to file at all! However, when you are hiring a lawyer make sure that they are experienced. You want a lawyer who is familiar with the filing process in your state, and someone who has practiced bankruptcy law for a considerable period. They also need to be aware of exactly what documentation needs to be filed, and the trustees they need to be filed under.
Tip #2- Review Your Expenditure
Before meeting with your lawyer, you might want to have a few things ready at hand. This will help you be prepared and speed up the process of filing for bankruptcy. Make copies of your bank account statements and review them to figure out where your money is going, and how much your monthly expenditure is. You will also be able to figure out how much disposable income you have that can be made available to creditors.
Tip #3- Document All Your Income
Try to figure out what all your sources of income are- do you have a house that is being rented out, do you have any fixed deposits or other forms of investments, do you have any income from self-employment? This will also give you an idea about where your money is coming from, and what part of it is disposable income. It would also be a good idea to find out how much your average income is per month, and the trend of this for the last six months.
Tip #4- Check If All Your Tax Returns Have Been Filed
You will be required to show evidence of filing your tax returns for the previous and/or current year during the filing process. So make sure, that all your returns have been filed. If your returns have not been filed your bankruptcy case could be dismissed.
Tip #5- Don’t Use Your Credit Cards or Transfer Your Assets
Make sure that you stop using your credit cards before you file for bankruptcy as this can complicate your case. Don’t take a cash advance on your credit card either. Also do not transfer any assets to friends or family before or during your bankruptcy case, as this too will complicate your case which might get dismissed.
Tip #6- Disclose All Your Income
Disclose ALL of your income; do NOT try to hide any income or assets that you might own. This is probably the most important tip, and your lawyer will help you make sure that you are not even accidentally committing fraud.