Before filing for bankruptcy, certain steps should be taken by the consumer to ensure that the case goes smoothly and is successful. Many times, it can help to sit down with a bankruptcy attorney for a free consultation, to discuss any potential issues that could arise in the case and to ensure that all the proper steps are taken by the consumer before filing.
Stop using credit cards.
One of the reasons people file for bankruptcy is due to insurmountable credit card debt. As soon as someone decides to file for bankruptcy, it is always recommended that he or she immediately ceases using their credit cards. Bankruptcy courts will view creating more debt when the person knows that it will never be repaid as a form of bankruptcy fraud.
Pay for essential expenses.
Many filers find themselves behind on the most basic bills prior to filing, including rent and utilities. Prior to filing for bankruptcy, a consumer should ensure that he or she is caught up on essential living expenses, including paying rent and utilities. While it is possible to discharge past due rent in a bankruptcy case, this does not necessarily mean that the person will be allowed to stay in his or her residence. The landlord is technically under no obligation to keep the tenant in the apartment or rental home if he or she owes back rent, even if a bankruptcy case is ongoing. If the tenant has any cash on hand before filing, it is often best to use that money to pay past utilities and past rent to keep a home over his or her head. If this money is used to pay for vital living expenses, the bankruptcy court will not see this movement of cash as trying to hide money from the bankruptcy trustee.
Change necessary bank accounts.
Occasionally, a person will owe money to a lender or financial institution they also have a bank account with. If that is the case, someone who is considering filing for bankruptcy should consider moving that money to another account. Many times, creditors will have the ability to take money owed directly from the account if they are connected, and by doing this, the filer is protecting himself or herself from this possibility.
End automated payments.
Many consumers have set up automatic payments with their bank and creditors, allowing creditors to auto debit their bank account. While this may be a convenient method, once a bankruptcy case is filed, it can quickly become a giant inconvenience. With the automatic stay, creditors are prohibited from directly soliciting payments on debts owed by the filer, but this does not necessarily mean these payments cannot be made via automatic monthly withdrawals that were in place prior to filing. To avoid this problem, prior to filing, consumers should sign on to all online accounts with creditors and end automatic payments.
File your tax return.
If someone is considering bankruptcy, taxes are often the last thing on that person’s mind. However, it is important that a consumer considering bankruptcy file his or her tax returns prior to filing. After all, the bankruptcy court will be looking at the consumer’s income and assets when deciding on what type of bankruptcy can be pursued, and tax returns are vital documents needed to make that determination.
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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.