Things to Do Prior to Filing for Bankruptcy

When you are buried so deeply in debt that you feel you will never be able to dig your way out, bankruptcy may be the answer. The process is designed to provide you a fresh start, but in order to get the most benefit from bankruptcy and avoid some pitfalls, you should make plans and do certain things prior to filing your bankruptcy petition.

• File all your tax returns. Your previous two years of tax returns must be filed prior to filing for Chapter 7 bankruptcy. Your previous four years must be filed prior to filing for bankruptcy under Chapter 13. Copies of these returns must be submitted to the bankruptcy trustee prior to the scheduled creditors meeting. The trustee may ask for additional tax information.
• Obtain your credit reports from all three reporting agencies. You want to be sure you include all your creditors and all your debt on your petition for discharge. If you fail to list a debt in your petition, it will not be discharged.
• Collect all relevant paperwork. There are documents, called Schedules, which you must accurately fill out and submit with your bankruptcy petition. Assembling relevant paperwork will assist you in accurately providing the following required information.
  • Names and addresses of all creditors including your account numbers and amount you owe each one.
  • Name of banks and account number of all checking and savings accounts.
  • Documents verifying ownership of all assets and amount of equity including homes, cars, boats, stocks, bonds, retirement accounts, computers, jewelry, etc.
  • Itemized monthly expenses.
  • List of any lawsuits you are involved in.
  • Names and addresses of creditors who have garnished your wages.
• Determine a value of your assets. In addition to listing your assets, you need to provide a reasonable estimate of the value of each one. For example, you may owe a mortgage of $100,000, but the market value of your home is $120,000. You need to provide this information to the court for each asset.
• Quit using your credit cards. Creditors may claim that you had no intent to pay for any purchases or cash advances you made on your credit cards for 90 days prior to filing. If you had no intent to pay, the actions may be considered fraudulent and not only will those credit card debts not be discharged, you may face prosecution for fraud.
• Take the required credit counseling course. In order to qualify, the course must be taken from an organization that is on a list approved by the court.
• Consult your bankruptcy attorney. Your attorney will apply the required means test to determine your eligibility. He or she will review your paperwork and help you proceed with the process.