Tips for Filing Bankruptcy

Bankruptcy is seen by most people as the end of everything when in fact it is the opposite. Bankruptcy is, and was designed as, a beginning. It is a means for those hopelessly in debt to get a fresh start. Far from being a catastrophe, filing bankruptcy can be a blessing, provided it is done correctly, taking into account all the bankruptcy laws and not taking premature decisions like selling your home before bankruptcy.

If you consider yourself in a hopeless situation and are considering filing bankruptcy then it is incumbent upon you to familiarize yourself with the bankruptcy laws as they apply in your state. Although you will be filing in a federal court, each state has different definitions of what is and is not exempt assets, especially equity assets.

Although selling your home before bankruptcy is not normally an option (unless done eight years previous to filing), some states have options that may allow you to keep some equity in your home. Remember any hasty disposal of equity can be voided by the bankruptcy trustee.

When filing for bankruptcy:

• Seek Professional Assistance
• Choose Type of Bankruptcy
• Determine Priority Debts
• Joint of Single Filing
• Review Assets and Debt

Seek Professional Assistance

Get professional bankruptcy help. There are many lawyers who specialize in bankruptcy law available locally or online. Do not try to do it alone. Fees payable to the lawyer will be monitored by the bankruptcy process.

Choose Type of Bankruptcy

Decide which type of bankruptcy would be the most beneficial to you, chapter 7 or chapter 13. Your lawyer should be able to guide you in this, but keep in mind that even if you would prefer a chapter 7 filing the courts may force you into a chapter 13 since the introduction of a ‘means test' in the new laws passed in October 2005.

Determine Priority Debts

Be aware that not all debts will be wiped out by the bankruptcy process. “Priority Debts” such as Federal or State Income Tax must be paid, as must Child Maintenance and Alimony if they are applicable.

Joint of Single Filing

Depending on the state you live in, and professional advice from your lawyer, decide if you want a joint filing with your spouse or a single filing in your name only.

Review Assets and Debt

It is extremely important to review your assets and debt before filing for bankruptcy. If you have property which will not be protected by an exemption, it may be sold and the proceeds may be used to pay your creditors. Any attempt at selling your home before bankruptcy or to switch a non-exempt to an exempt asset may be scrutinized by the bankruptcy judge. In addition, you must claim any exemption to which you feel you may be entitled. If you do not claim the exemption, you may lose the property.

In order to realize the new beginning which bankruptcy laws were designed to give you it is important, when filing bankruptcy to be totally open and frank with the bankruptcy court.