Your bankruptcy will go more smoothly if you are prepared
Sometimes, despite your best efforts, you can find yourself in a financial mess that keeps getting worse. You may be getting calls from bill collectors or face foreclosure. When you are overwhelmed by debt, filing bankruptcy is often a lifesaver. Bankruptcy gives you an opportunity to get a fresh financial start. But, before you file for bankruptcy, you should take some steps to help ensure that your bankruptcy goes smoothly.
The court wants to know how you’ve spent your money
The New York Bankruptcy Court will review how you’ve been spending your money. Unless you need the money for necessities (e.g. food, clothing, utilities), avoid running up debt 70 to 90 days before filing for bankruptcy. In the three months before filing for bankruptcy, DO NOT:
- Make big payments on credit accounts. If it looks like you’ve taken a cash advance or credit for luxury items in the months leading up to filing for bankruptcy, that debt will probably not be dischargeable under bankruptcy.
- Transfer assets or anything of value to someone else or another person’s accounts. You might be tempted to hide assets by giving them to someone else, but doing so could make you liable for criminal penalties. It’s not worth the risk
- Withdraw or transfer large sums of cash. Even if you are paying back loans to friends or families, it can look like you are giving an unfair advantage to one creditor over another. If that happens, the bankruptcy court may take the money back from the people or entities you paid
- Withdraw funds from retirement accounts. Many people contemplating bankruptcy make the mistake of withdrawing funds from retirement accounts to pay off debts. But, in most bankruptcy filings, you can protect your retirement funds. If you withdraw from retirement funds, you could be taking out money to pay a debt that bankruptcy would have wiped out.
Protecting your retirement funds is one of many reasons why you should contact a knowledgeable bankruptcy attorney as soon as possible when you have financial problems.
Before filing for bankruptcy, be sure you meet the requirements
Some of the requirements you must meet before filing for bankruptcy include:
- Before you file for bankruptcy, you must have lived in the state where you are filing for at least 90 days.
- During the bankruptcy process, you will be required to go for credit counseling.
- To file for a Chapter 7 bankruptcy (liquidation bankruptcy), you will need to meet some income qualifications (means test).
- If you do not meet the requirements of the Chapter 7 bankruptcy means test, you will probably qualify for a Chapter 13 bankruptcy (also called reorganization bankruptcy or wage-earner bankruptcy). You must be able to show that you can afford to make the Chapter 13 plan payment every month for 60 months.
Contact a Bronx bankruptcy attorney for a free consultation
Bronx attorney Thomas M. Denaro, Esq. has more than 30 years of experience helping New York clients overcome their financial problems. He can help you prepare for your bankruptcy filing. If you live in the Bronx, Bronx and Westchester, Queens, Kings, Richmond, Suffolk, Nassau, Rockland, Orange, Putnam, and Duchess Counties, contact us today online or call (718) 863-6000 to arrange a free consultation with a bankruptcy attorney you can trust.