The New Year is a popular time for financial check-ins, motivating people to set goals like paying off debt. For those struggling with overwhelming debt, bankruptcy can be a legal pathway to a fresh start, eliminating eligible debts.
Before filing for bankruptcy, certain steps should be taken to ensure the case goes smoothly and is successful.
- Stop using credit cards.
One of the reasons people file for bankruptcy is due to overwhelming 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 the essentials.
Many filers find themselves behind on bills prior to filing, including rent and utilities. Prior to filing for bankruptcy, make sure you are caught up on essential living expenses, including paying rent and utilities.
- End automated payments.
Many consumers 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.
- Gather financial records.
Organize recent pay stubs (60 days), bank statements, tax returns (2 years), asset details (home, cars), and creditor statements.
- 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 bon what type of bankruptcy can be pursued, and tax returns are vital documents needed to make that determination.
5. Review Your Credit Report.
Get a copy of your credit report for free by visiting Annual Credit Report.com – Home Page. Free weekly online credit reports are available from Equifax, Experian and TransUnion. Credit reports play an important role in your financial life, and we encourage you to regularly check your credit history to ensure accuracy.
You can regain control of your financial future in 2026. The consultation is free; the relief is real. 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.
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