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Things To Consider Before Filing Chapter 7 Bankruptcy
Bankruptcy can be extremely helpful in resolving serious financial challenges. However, it is not the solution to all financial problems nor is it suitable in all circumstances for everyone. Because of the significance of the process and its ramifications for the future, it is prudent to seek legal counsel to help navigate the complicated process and to best prepare to maximize the available advantages and protections.
First, it is imperative to choose the right time to file bankruptcy. You should wait as long as possible because you can only file once every six years. It is important to save the "fresh start" until you absolutely need its protection. Second, analyze whether you have non-exempt property and/or income before deciding to file for bankruptcy relief. If you have no non-exempt property or wages vulnerable to creditors' grasps, then it may not make sense to file.
Prepare before signing papers
Before signing bankruptcy papers, further prepare by doing the following to maximize the benefit of bankruptcy and its protections:
- Provide detailed property and asset inventories - If you provide a detailed and complete list of your property and assets in your bankruptcy, the court will protect the listed items under bankruptcy laws. If you fail to provide a thorough list, omitted items are unprotected and may be seized by creditors.
- Be prepared for credit report impairment - Filing bankruptcy does not rehabilitate a damaged credit report. The credit report will remain blemished throughout the bankruptcy process. Bankruptcy stays on the credit report for as long as 10 years, and usually at least seven years.
- Avoid more debt - While in bankruptcy, it is prudent not to amass more debt. If you recklessly and intentionally accumulate debt, thinking the bankruptcy will erase new debts, you may be found guilty of criminal misconduct.
- Stay collectors - As soon as you file bankruptcy, the automatic stay silences creditors. They are not allowed to contact debtors for any purpose, and all harassment ceases.
- Bankruptcy cases can be dismissed - If a debtor lies, steals and/or cheats and is caught doing same, the bankruptcy court will likely dismiss the debtor's case as a punitive response. Hiding key facts, omitting information, failing to provide information, misrepresenting oneself and failing to be honest with counsel are offenses which might lead to dismissal of the bankruptcy case.
- Bankruptcy is difficult - Bankruptcy is not easy. There are required court appearances. Detailed information is required by the court and trustee. It may prove difficult to navigate the process. The costs and fees for counsel are significant. Bankruptcy will disrupt a debtor's life for a long time.