There are a lot of steps that need to be taken when filing for Chapter 13 bankruptcy. It’s essential to take the right actions before filing for bankruptcy and always follow the guidance of your bankruptcy attorney to ensure you don’t do the wrong thing (which could jeopardize your bankruptcy case).
What To Do
There are essential steps you need to take when filing for Chapter 13 bankruptcy. Some of the most crucial actions can include:
Gather all of your financial information.
You will need to show your entire financial picture when you file for bankruptcy. When working with your lawyer and starting the legal process, make sure to compile a list of:
- Your debts
- Your assets (all of them, no matter how insignificant you think they are)
- Your income information from all sources
- Deeds and titles to all property
- Tax returns for the past three years
- Social Security Card and Driver’s License (or another form of identity)
- Loan documents
- Your three bureau credit reports (available for free at www.annualcreditreport.com)
- If applicable, divorce paperwork or child support orders
- Bank and retirement account information
Though not a comprehensive list, the above will get your attorney far down the road to preparing your case.
Hire an attorney.
It’s essential to hire a bankruptcy attorney to help you navigate the bankruptcy process. A lawyer has the experience to help you understand what you can expect and what you need to know. He or she will also explain the fees you might need to pay, the expected timeline of the bankruptcy process, and anything else you need to know about filing for bankruptcy. It’s also essential to consult your attorney before making any major purchases or financial decisions.
Keep paying some of your bills.
While some of your debts will be discharged during your bankruptcy proceedings, you should keep paying some bills such as your rent, child support, mortgage, insurance, and some other expenses. Your attorney will help detail which bills you should pay and which ones you can hold off on. Your attorney can also guide how much to pay towards any debts leading up to your proceedings.
What Not To Do
When filing for Chapter 13 bankruptcy, there are also things you do not want to do. This can include a variety of topics based on your case, but some of the common ones you should avoid are:
Don’t use your credit cards.
While it might be tempting to charge a bunch of items on your credit cards – knowing they will likely be discharged during your bankruptcy – this will end up hurting you and your case. It’s also essential to not take large cash advances on your credit cards.
Don’t transfer money or assets to a loved one.
If you’re thinking it makes sense to quickly move money out of your checking accounts or move assets into the names of your loved ones – or remove your name from titles – DO NOT DO THIS UNTIL YOU HAVE CONSULTED WITH THE BANKRUPTCY ATTORNEY. This can create significant issues in your case under theories of preference recovery or fraudulent transfer. If you have done so, you must let the attorney know prior to the filing of your case.
Don’t file for bankruptcy without letting the attorney know you are expecting a large tax return or inheritance.
Any incoming money will be added to your financial portfolio, so it’s important to talk to your attorney before filing for bankruptcy if you are expecting a significant tax refund or inheritance.
Don’t cash out your 401K.
Do you think it makes sense to cash out your 401k to pay off your debt? We understand the logic – but it’s not necessary. Most of your debts will be discharged through your repayment plan, and your retirement account will be protected during the Chapter 13 bankruptcy proceedings. Therefore, there is no benefit to taking money out of your retirement fund. DO NOT DO THIS UNTIL YOU HAVE CONSULTED WITH A BANKRUPTCY ATTORNEY.
Don’t forget to show up to court proceedings.
When going through your bankruptcy proceedings, make sure to appear for all scheduled court appearances and hearings. It will work against you if you do not show up. If you have concerns about a court date, make sure to talk to your attorney about it.
Let a Chapter 13 Bankruptcy Attorney Help
If you are considering filing for bankruptcy, let our lawyers at The Law Offices of Alexzander C.J. Adams, P.C. help prepare you for what to expect. We work for you, the people, and not institutions. Contact us for a free case evaluation, or no-obligation consultation. We are dedicated to helping you overcome this small bump in the road and assisting you to get on with your life.