If you plan to file bankruptcy, there are several things you should or must do prior to filing—or even before retaining an attorney.
Here is a brief, non-exhaustive list of the dos and don'ts before filing bankruptcy.
- DO take your Credit Counseling course, online or over the phone. This takes an hour and costs about $25. You must take this before you can file a case, with very few exceptions.
- DO begin to gather your financial documents, including your proof of income, bank statements, two years of taxes, lawsuit information for any cases against you, and a credit report. A mortgage statement and car loan statement is also good to have. Your attorney may also ask for copies of bills and collection letters, as well.
- DO consider opening a new bank account, especially if you do your banking somewhere that you owe money. The bank may close your account when you file bankruptcy, so it's a good idea to already have a new bank account set up when you file.
- DO refer collection calls to your attorney, once you have retained one. You are free to speak with your creditors, but you retained an attorney for a reason. One exception is if you are working on a loan modification and your attorney is not involved in that process. But in general, you can refer collection agencies to your attorney.
- DO ask your attorney questions and tell them of any change in circumstances. If you aren't sure about something, contact your attorney for guidance.
There are also some things you should avoid doing. If you find you've already done some of the things to avoid, let your attorney know right away. If you try to undo your actions, you could actually make the situation worse.
- DO NOT repay any money to family or friends without first contacting your attorney. If you have already done so in the past year, let your attorney know.
- DO NOT withdraw funds from your retirement accounts to repay debts without discussing this with your attorney. This is almost always a bad idea.
- DO NOT transfer any assets (real estate, car, money, or anything of value) to family or friends, without first contacting your attorney. You may be able to do so, but certain requirements must be met or your family and friends can be affected.
- DO NOT finance a new vehicle just before filing your case. If you do finance a car, it can mean a delay in filing your case. Speak with your attorney prior to doing this.
- DO NOT use your credit cards or acquire new debt. Unplanned medical debt may be an exception, as you may not have a choice about incurring the debt. But if you use credit shortly before filing bankruptcy, you may end up having to repay some or all of that debt.
- DO NOT ignore any lawsuit that's filed, even if it does not have a case number on it. Provide a copy to your attorney right away.
The best course is to contact your attorney to discuss any specific questions you have. Asking a few questions at the outset and creating a plan to get your bankruptcy filed will often make your case go much more smoothly. Most of the time, the bulk of the work comes before your case is filed. Then you go to one court hearing to answer a few questions and your case continues to completion. The work you do at the beginning makes the process much smoother once the case is filed, and is worth the effort.