A bankruptcy declaration should not be thought of as a single act. It can take months of preparation before you file your federal paperwork and then several more months before it's final. Before you file, there are tasks that need to be accomplished. Read on to find out what to do before you file chapter 7 bankruptcy.
Make Sure Your Income is Appropriate
Once you decide to declare chapter 7, your first move should be to check your income against your state's median income. If your income is higher, you may need to take more steps before you can file. With an eye toward preventing high-income applicants from filing, income that exceeds the state median has to be accounted for. Only the last six months of income are in question so if you expect your income to fall enough to file in the future, you might want to delay a filing if you can.
If you want or need to file now, you might still be able to file if you can pass the means test. This test considers the reasons why your income is not enough to cover your expenses in spite of your stated income. In addition, you might consider filing chapter 13 rather than chapter7 as it has no income restrictions.
Meet Your Bankruptcy Lawyer
Along with the income requirement, there are numerous other issues that can occur prior to a bankruptcy filing that filers need to be aware of. A bankruptcy lawyer can review your financial information and advise you on what else needs to be done before you file. For example, the bankruptcy trustee has the power to look back at your financial transactions for several months before you file to make sure you did not sell or give away anything of value. The bankruptcy court and the trustee, in particular, can undo those transactions if they are judged to be fraudulent. Your attorney can help you prepare for those actions and recommend you delay filing, if necessary.
Take the Credit Counseling Class
This class has to be completed prior to your filing. It is more of a budget evaluation than a class, however. The information you provide about your monthly financial budget is evaluated by a credit counseling agency and they determine, based on your input, whether or not you should be able to pay your bills without declaring bankruptcy. Be sure to be honest about your debt obligations – this is not the time to be shy about your poor financial situation.
Your bankruptcy lawyer will have some advice about using your credit cards prior to filing and more, so speak to an attorney and get ready for the financial relief you need.
If you're having trouble meeting your financial obligations, look into personal bankruptcy.