Some Things You Need To Consider Before Filing Bankruptcy

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Some Things You Need To Consider Before Filing Bankruptcy

Are you plague by so much debt that the only answer is to file for bankruptcy shelter? If so, have you taken the time to think about what is involved and how you should approach this bankruptcy procedure in order to come out of it financially sound? Preparing your bankruptcy filing can include when is the ideal time to actually file for bankruptcy. Some of the items that your pre-bankruptcy planning should contain are:

Decide what debt is dischargeable before filing for bankruptcy

When you already know a definite debt can be dismissed through the bankruptcy procedure, does it make sense to stop paying for this debt while you can use that money to pay off another one? To demonstrate what this means, hypothetically you have $30K of credit card debt, and a mortgage on your house. If you already know that bankruptcy is your best alternative to survive this financial sinkhole, then why not only pay for the relevant debt that will matter post bankruptcy procedure? Since a credit card is most likely going to be discharged, why not hold off that payment for the time being. Use the credit card payment to pay down or pay off bills that matter, such as the mortgage on the house. Since credit card balance will be discharged in the bankruptcy procedure, while secured loans such as the mortgage will most likely not be discharged. As a basic rule of thumb in regards to pre-bankruptcy, retain as many asset as you can. You can do this by paying the non dischargeable debt first, while refraining from paying back the dischargeable debt.

Discontinue using credit card during the pre-bankruptcy stage to avoid any suspicion

If you already have a good idea that you are financially unsound, and that the chances of filing for bankruptcy shelter is high, you should stop using your credit cards. By using your credit cards to buy unnecessary and expensive toys such as the new Apple iPad, you can introduce suspicion into the mind of the bankruptcy trustee. You do not want the bankruptcy trustee to think there is foul play with your bankruptcy case. If the trustee suspects you have incurred debt just to have it dismissed during the bankruptcy procedure, it can cause some serious issues. Be advised that you should not buy $1000s of thousands of merchandise or withdraw more than $1K from the credit card 60 days before our bankruptcy filing. If you do so, the bankruptcy judge might not discharge these debt. When you still have non dischargeable debt on your records, you will have to pay it off first before the entire bankruptcy case can be discharged.

Do not commit bankruptcy fraud by using your credit cards for purchases that you know you will not be paying for. Bankruptcy fraud is a grave offense and should not be treated casually as it can include fines or the dismissal of the case.

Maximize permissible exemptions before filing for bankruptcy

Exemptions in bankruptcy law means that you will be allowed the keep the assets in question. When you have stated an asset as exempt, the bankruptcy trustee will not take this asset and sell it to satisfy the debt obligation to the creditors.  It is possible to classify non-exempt assets as exempt, but the procedure should be left up to the professional bankruptcy lawyers.

Do not discount the significance of preparing your pre-bankruptcy case in advanced. You can elect to keep some of your assets if you can plan your pre-bankruptcy steps carefully. It is not illegal to plan your bankruptcy every step of the way. While you need to file bankruptcy, planning it ahead of time is absolutely legal as long as you are abiding by the laws of the bankruptcy law. If you are uncertain of the procedure for filing bankruptcy, check out ToFileBankruptcyOrnot.com.

Steve Sanchez has recently overcome the economic depression of 2008-2009 by declaring bankruptcy.  Even though bankruptcy has devastated Steve financially and emotionally, Steve has rebuilt his businesses in the last 6 months and he has not looked back since.One of his project is to educate people on bankruptcy.  Having gone through the ordeal himself, he has first hand knowledge of the pros and cons of filing for bankruptcy protection.  Please visit his site http://ToFileBankruptcyOrNot.com if you want additional information regarding bankruptcy.
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