Many people who make the decision to file a petition for bankruptcy have been thinking about it for a while. In most households, a series of life and financial events usually cause an inability to keep up with the payments on houses, cars, credit cards and so on. There are a few “last straws” that prompt people to file for bankruptcy. Wage garnishments and home foreclosures are common events that cause an individual person or married couple to declare bankruptcy in either a Chapter 7 discharge or a Chapter 13 reorganization bankruptcy.
- Measuring the credibility of collector threats;
Debt collectors have very convincing threats they can use to coerce you into making a payment on a debt you owe them, regardless whether you can afford to pay them. If paying a credit card, for example, means you will be without food or power, you might not be able to afford to pay them. If the amount you owe is not significant a collector might simply call you forever. They might also sue you. Remember that large credit card companies have collectors with attorneys on file it may cost them very little to get a money judgment against you. If there is a judgment against you, the creditor may get the court to seize cash in your bank account or force the sale of assets to pay the debt. A bankruptcy could stop that creditor in their tracks.
- Keep your cash account balances low if you are concerned with account seizures;
If you have money sitting in your checking account to pay large bills such as rent and mortgage payments, consider converting cash into money orders or otherwise safeguard it somewhere else than cash checking accounts. If your account is seized by the court in collection of a money judgment, you may have a very difficult time persuading your creditor or court to return your cash because you had it budgeted for car or housing payments.
- Negotiating payment plans to avoid bank account seizures;
Even though a creditor might obtain a money judgment against you for the full amount they are seeking, they might also accept monthly payments, and so long as they receive monthly payments they might refrain from seizing your cash accounts and assets.
- Creating all your list of debts and collectors;
Order a copy of your credit report using a website such as Credit Karma (they advertise no fee access to credit scores and reports) and compile a master list of everyone to whom you owe money. By reviewing all three credit reports (Equifax, Trans Union and Experian) you can make sure nothing slips between the cracks. A bankruptcy petition requires a complete listing of all creditors. It is a good idea to become familiar with how credit is reported so you can later watch over it and make sure there are no inaccuracies. Many people have some sort of incorrect information listed on their credit report(s).
- Meet with a bankruptcy attorney who can advise you about next steps;
In order to qualify for Chapter 7 or Chapter 13 bankruptcy it is recommended you work with a licensed bankruptcy attorney who understands how to navigate the complex system of bankruptcy qualifications such as the means test for Chapter 7. Your bankruptcy attorney can also tell you everything you need to do to prepare for your bankruptcy case. When you are looking for a bankruptcy attorney, look for an attorney or law firm primarily focused in bankruptcy law because that experience is helpful to making sure you get a fresh financial start with the best outcome from the bankruptcy case.
- Create a working budget during bankruptcy and stick to it after;
Many people say that the most important credit factor about bankruptcy is what you do to protect your credit after a bankruptcy. Since the automatic stay provision of your bankruptcy stops creditors from collecting from you during the case, you will be able to apportion monthly income to keep up with important payments and start saving money for the future. Setting and sticking to a strict budget will help in building discipline and living within your means so you can avoid financial problems in the future. Just as easily, as people fall into the habit of overspending, they can learn the habit of budgeted spending.
- Research how to challenge negative marks on credit reports.
A bankruptcy discharge may eliminate your duty to pay certain debts, but that does not automatically wipe those debts from your credit rating. Your credit score might still be low after your bankruptcy case, and it will be necessary to let the credit reporting agencies know that a debt is no longer owed and should be eliminated from the credit report. There are agencies who work with clients, for a reasonable fee, and help update the credit agencies to reflect the results of a bankruptcy discharge order.
Most of a bankruptcy client’s anxiety can occur in the time before a bankruptcy filing. Once the information is collected and the process is underway, the client can relax and prepare for financial success with a fresh start.
Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’s Facebook page and Follow Joseph Wrobel. Ltd. onTwitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.