What to consider before filing a bankruptcy
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There are many things an individual should consider before filing for bankruptcy. One very important concern should be what chapter of bankruptcy is applicable to the case and is it the best option for the individual. Some important things to consider before filing for bankruptcy include:
- Income in the previous six months to filing
- Debts that can be discharged versus debt that cannot be discharged
- What transactions are risky to the judgment of a bankruptcy filing
- Know what assets are exempt
If an individual is filing because of unemployment or some loss of income, an important thing to remember is that the income earned in the previous six months before filing will be used as a gage for your eligibility to file, repayment of debt, or for the terms of the bankruptcy.
Regardless of the chapter, some debt cannot be discharged, such as secured debt, student loans, child support, spousal support, or taxes. Make appropriate plans and financially sound decisions by applying any payment of debt to those that will not be affected by discharge of debt.
Any cash advances taken on a credit card that collectedly add up to over $750 in the 70 prior to filing will not be dischargeable and may put the eligibility of the filer in question. The same holds true for any charges made on a credit card after a debtor has met with a bankruptcy attorney.
It is important to know what property or assets are allowed to be exempt from creditor claims before you file for bankruptcy. Property exemptions are what a debtor is allowed to keep. According to the bankruptcy code, exempt property is any essential and fundamental assets, belongings, or property deemed necessary for the debtor to make a fresh start. The debtor must claim any exempt property in the schedules (list of debt, assets, and creditors) needed to initiate a case before the bankruptcy court. The exemptions become final30 days after the meeting of creditors, if they are not challenged by the creditors. While the bankruptcy code is collection of federal laws, the bankruptcy code permits states to implement their own laws on what assets can be exempt and some states let the debtor chose which set of property exemption laws they wish to apply in their case.
A debtor should also be aware that any assets transferred to another person’s name up to one year before filing for bankruptcy can be accessed by creditors and the court appointed trustee. The court may also consider any transfer of assets within one year of the bankruptcy as questionable and may deny the petition for bankruptcy or not allow the discharge of debt. In some states the time may be extended to go back further than one year.
Before you file for bankruptcy you should consult with a bankruptcy attorney that has experience and knowledge of the bankruptcy code and the laws in your state. Click here to talk to bankruptcy attorney in your state now!