When thinking about filing for bankruptcy, there are several practical things you should know before making the decision.
As we’ve talked about before, there are two types for people: Chapter 7 and Chapter 13. Chapter 7 discharges most debt although you may have to give up nonexempt property. A bankruptcy trustee will review the paperwork (petition) filed with the bankruptcy court. The trustee will determine what property is exempt and what is nonexempt. A Chapter 13 creates a plan that must be approved by a bankruptcy trustee. The plan allows for you to keep your property so long as you make scheduled payments. For more information on a Chapter 7 or Chapter 13, please contact me.
Here are some things that you should do if you are thinking about filing for bankruptcy:
- If you have a retirement plan like a 401K or IRA, do not dip into those funds to pay off debts. In bankruptcy, retirement plans are exempt from creditors.
- Do not run up credit card debt prior to filing your bankruptcy. A bankruptcy trustee may find out about this which may cause delay in your bankruptcy and maybe worse.
- Tell your attorney when filing the bankruptcy petition of all of your debts. If you do not reveal any debts, the bankruptcy court will not discharge the debt. Thus, you still may be responsible for the debt even though it could have been discharged.
- Do not transfer assets to another to avoid creditors. A bankruptcy trustee may consider this a fraudulent conveyance.
Filing Fee waivers or payment plans
While you may have to pay for an attorney to help you with your bankruptcy, you may be able to file for a fee waiver of your bankruptcy petition. The other alternative is that you pay the bankruptcy fee in installments. You should ask your attorney about these alternatives when filing for bankruptcy.
If you have further questions about bankruptcy, please give me a call at (206) 684-9462.