Before filing for bankruptcy, I recommend the following:
- Add up your debt: Add up the amount and kind of debt you have in order to know whether bankruptcy will help you. For example, credit card debt is generally forgiven in bankruptcy. However, most taxes are not forgiven. Also, if your outstanding debt is small and you have the ability to pay, bankruptcy might not be the best choice. Figuring out how much debt you have will help you know what benefit you can expect from bankruptcy.
- Make a list of what you own: You must list all assets on your bankruptcy filing including real estate, bank accounts, and stock accounts. The bankruptcy courts allow you to protect some of these items. It is important to make a list of all items you own before filing to make sure they can be protected (bankruptcy courts call these exemptions). If you wait until after filing to do this, you may lose your assets.
- Figure out your current income: You amust list all income for the last 6 months on your bankruptcy paperwork. Depending on your income, you may not qualify for certain types of bankruptcy. By adding up all your income before filing, you can understand what options are available to you.
- Determine the best type of bankruptcy for your situation: Most consumers will file Chapter 7 bankruptcy or Chapter 13 bankruptcy. Each version is different and will have different benefits. For instance, Chapter 13 bankruptcy will give you more time to catch up on payments on your mortgage if you fall behind. If you don’t own a home or other secured debt, Chapter 7 bankruptcy might be a better option for you. A licensed attorney can help you make the best choice for your circumstances.
What’s Next?
After you have done the four steps above, I recommend you contact a licensed attorney. The Riverside Bankruptcy Attorneys at De Novo Law Firm offer free consultations. Contact us today at (951) 801-5570.