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Q.How should I prepare for a bankruptcy filing?
A.First, you should consult with an attorney. An attorney can help you plan for the bankruptcy, decide when to file a bankruptcy petition, or help you avoid filing for bankruptcy. However, if yoy intend to file for bankruptcy some things you should do include:
- Stop using your credit cards. If you borrow money with the specific intent of discharging the debt in bankruptcy instead of paying it back, the debt is not dischargeable. You should note that: (a) certain luxury purchases (over $1000) made within 60 days of the bankruptcy filing will be presumed nondischargeable; (b) cash advances totaling $1000 within 60 days of the bankruptcy filing will also be presumed nondischargeable; and (c) debts involving materially false financial statements may be nondischargeable under certain circumstances.
- Retain possession of all your assets and property.If you transfer any assets to friends, family or business associates with the intent of protecting or hiding the asset from a creditor, the transfer may be considered a fraudulent conveyance. If it is, you may lose both the property and your right to a bankruptcy discharge.
- Keep all financial and other business records. You can lose your right to a bankruptcy discharge if you destroy them.
- Choose carefully which creditors you pay. Some creditors, such as landlords, secured creditors, and some utilities should be paid under most circumstances. If you pay a credit card debt that eventually will be discharged, you may be throwing money away. You should consult a local bankruptcy attorney for advice on what debts you should and should not pay while you prepare to file a bankruptcy petition.
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