Once you've made the bankruptcy decision, you should take some steps to prepare yourself. A chapter 7 bankruptcy should be considered a process made up of preparation, filing, waiting for the discharge, the discharge, and recovery. To help you get your bankruptcy off to a good start, take the below steps and be as prepared as possible before you file your paperwork.
Examine Your Income
None of the prep work below will be necessary if you are unable to file a chapter 7 bankruptcy because of your income. You must not make more than your state's median income — or else you cannot file without undergoing the means test. The last six months of your income is considered and compared to the median income for your state. If you make more than the median income, the means test leads you through a series of expense deductions to determine whether or not you qualify to file. If you make too much even after deducting the qualified expenses, you might be able to file a chapter 13 instead of a chapter 7 bankruptcy. If your income is expected to decrease in the coming months, you might be able to wait a month or two and run the numbers again.
Speak With a Bankruptcy Lawyer
You will need an attorney to assist you in complying with the many rules that the bankruptcy code imposes on consumers. There are classes, tests, creditor meetings, home inspections, and more legal activities that are sure to confound filers who think they can go it alone. For example, even if you were unsuccessful in your means test calculations, speak to a bankruptcy lawyer so that your work can be checked and your expenses verified. Without speaking to an expert, you might forgo bankruptcy only to find yourself losing property and suffering more consequences of your financial situation.
Participate in the Credit Counseling
You must complete this first of two classes before you file. The counseling class can be completed up to six months prior to your filing, and it can be done online, by mail, in person, or over the phone.
Keep Tabs on Your Credit Use
You won't be able to file in a timely manner if you have misused your credit cards. There are rules about how much you can use your cards to charge items or to get cash advances in the period leading directly up to the bankruptcy filing.
You will need to provide the following information to your attorney, so gather:
- Tax returns for previous years.
- Names, contact information, and account numbers of all creditors.
- List of all assets including real estate, vehicles, bank accounts, and more.
Speak to a bankruptcy attorney at a firm like Merna Law to learn more.