If you are seriously considering filing for bankruptcy, here are 7 things that you NEED to do:
1. File Your Taxes. When you file for bankruptcy, it is expected that you will have filed all of your tax returns and you are required to give your trustee a copy of your most recent return. If you have not filed your taxes, your bankruptcy can be dismissed. Also, if you expect a tax refund, it is important to know how much you will be receiving to know if you can exempt (protect) the refund.
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2. Quit Paying Unsecured Debts. Most unsecured debts will be discharged in bankruptcy, so that you will have no further liability for those. Unsecured debts include things like credit cards, personal loans and lines of credit, and medical debts. Once you decide to file for bankruptcy, it no longer makes sense to pay these debts. You are just throwing money away. Keep in mind that things like student loans, most past due taxes, and child support cannot be discharged even though they are unsecured. You need to continue making payments for those debts.
3. Keep Paying for Items You Want to Keep. If you file for bankruptcy and want to keep your house, car, or any other asset that has a loan against it, you must continue making your payments on that debt. Also, in most cases you must be current on your house to file for Chapter 7 bankruptcy.
4. Stop Using Credit Cards. If you incur debt knowing that you are going to file for bankruptcy, that debt is not dischargeable. It is also possible that your entire bankruptcy could be dismissed for fraud.
5. Get Your Credit Report. Pull a copy of your credit report so that you can see exactly what your debts are. It will help you (or your lawyer) understand your overall financial picture and decide whether bankruptcy is your best option. You can get your credit report from all three credit reporting agencies at www.annualcreditreport.com. This site allows you one free report from each agency once per year. It does not require a credit card and, unlike many sites advertised on TV, it does require you to subscribe to a credit monitoring service. Go ahead and get all 3 reports because it is common for some debts to show on one report but not another.
6. Gather documents. There are a lot of documents that you and your lawyer will to prepare your bankruptcy petition, many of which require you to go back in time. So, plan ahead and start pulling information regarding your income, debts, assets, and expenses. Among other things, you will need pay stubs for the past 6 months, bank statements (including investment and retirement accounts) for the past 3 months, tax returns for the past 2-4 years, copies of car, boat, and trailer titles, the recorded deed and recorded mortgage(s) for your house and other real estate, insurance policies, copies of any leases or contracts, a copy of your divorce judgment (if you have been divorced within the last 6 years), copies of any lawsuits and/or garnishments, a list of all of your assets and estimated values, and a list of your monthly expenses.
7. Find an Attorney. Although by law you are not required to have a lawyer to file for bankruptcy, it is generally a bad idea to do it yourself. Bankruptcy is a highly complicated area of law that changes frequently. If you do it yourself and don't do it correctly, it will likely end up costing you more to have a lawyer fix it than it would have to hire a lawyer from the start. Make sure that you find a lawyer that is responsive and that makes you feel comfortable.
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