For many people, one of the most difficult decisions in life is determining if they should file for bankruptcy. In a struggling economy, more individuals are finding relief with the option due to an astronomical amount of personal debt. Although filing for bankruptcy may be the best option, it’s important to know the right way of filing to prevent more damage or loss from occurring.
Choose the Right Time to File
In many cases, it’s important to choose the right time to file for bankruptcy, depending on your situation. Experts recommend filing immediately if you’re facing foreclosure on a home or repossession of certain property. If you are planning on moving to another state, file before you pick up and leave to prevent a different outcome with the case. If you make less than you did in the last six months or are now unemployed, it can pay off to delay filing for Chapter 7 bankruptcy.
Hire a Lawyer
It’s important to know your rights and protect your assets while filing for bankruptcy, as an experienced attorney can help with the process of completing all of the paperwork. According to Jennings & Medura, you should first interview different lawyers in the area to learn the different options available. Ask important questions to determine the qualifications of each attorney, which can include who will work to prepare the case and how much the legal fees will cost. You’ll also want to know how long the firm has been working with bankruptcy cases and if they offer any other legal services. In some cases, you may be able to obtain free legal services after contacting the American Bar Association.
Avoid Making Payments on Debt
Budget accordingly before filing for bankruptcy and avoid paying off credit card or medical debt, which will eventually be erased. Instead, put use the money toward car payments or necessities and establish a budget when filing for Chapter 13 bankruptcy. Avoid splurging and wasting the money on unnecessary items that can weaken your case. You’ll also need to make sure that you can afford any type of payment plan that is established after filing while avoiding getting back into debt.
Research Your State’s Exemptions
Each state has a different list of exemptions, which should cause you to research the laws to know how much of your property you’ll be able to keep. With the right exemption planning, you may be able to protect more of your property. If you still have liquid assets, spend it on necessities like food or fuel.
It may feel overwhelming to file for bankruptcy and begin the process with a lawyer, but by researching your state’s laws and budgeting properly, you’ll be able to avoid any complications and come out ahead. Although you may not feel proud to file for bankruptcy, you can still work to protect a fair amount of your assets and be one step closer to financial freedom when acting smart about the process.