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Your Pre-Bankruptcy Checklist: 7 Crucial Steps Before You File

Bankruptcy can offer a fresh start when you’re drowning in debt, but it’s not a decision to make lightly. Before you dive into the bankruptcy process, you need to prepare.

This pre-bankruptcy checklist will guide you through seven crucial steps to take before you file, with a special focus on the most important step: finding and hiring the right attorney.

Step 1: Assess Your Financial Situation

Before you even consider bankruptcy, take a hard look at your finances. Gather all your financial documents, including:

• Income statements
• Tax returns for the last two years
• List of all debts (credit cards, loans, medical bills)
• List of all assets (property, vehicles, investments)
• Recent bank statements
• Credit report

Create a comprehensive picture of your financial situation. This will help you determine if bankruptcy is truly necessary and will be crucial information for your attorney.

Step 2: Consider Alternatives to Bankruptcy

Bankruptcy should be a last resort. Explore other options first:

• Debt consolidation
• Negotiating with creditors
• Credit counseling
• Debt settlement

These alternatives might help you avoid bankruptcy altogether. If they don’t work, you’ll know you’ve exhausted all other options before filing.

Step 3: Determine Which Type of Bankruptcy Suits Your Situation

There are two main types of personal bankruptcy: Chapter 7 and Chapter 13. Each has its own requirements and outcomes:

Chapter 7:

• Liquidates your non-exempt assets to pay off debts
• Typically takes 3-6 months
• Best for those with low income and few assets

Chapter 13:

• Creates a 3-5 year repayment plan
• Allows you to keep your assets
• Best for those with regular income and assets they want to protect

Understanding these options will help you have an informed discussion with your attorney.

Step 4: Find and Hire the Right Bankruptcy Attorney

This is the most crucial step in your pre-bankruptcy checklist. A skilled bankruptcy attorney can make or break your case. Here’s how to find and hire the right one:

1. Start Your Search

• Ask for recommendations from trusted friends or professionals
• Contact your local bar association for referrals
• Use online resources like Avvo, Martindale-Hubbell, or FindLaw
• Look for attorneys who offer free initial consultations

2. Research Potential Attorneys

• Check their specialization (look for those focusing on bankruptcy)
• Verify their credentials and disciplinary record with the state bar
• Read client reviews and ratings
• Look for board certification in consumer bankruptcy law

3. Prepare for Consultations

• Gather all your financial documents
• Prepare a list of questions about your case and the attorney’s experience
• Be ready to discuss your financial situation honestly

4. Interview Attorneys During consultations, ask:

• How many bankruptcy cases have you handled?
• What percentage of your practice is bankruptcy?
• Which type of bankruptcy do you recommend for me and why?
• What challenges do you foresee in my case?
• How will we communicate throughout the process?
• What are your fees, and what do they include?

5. Assess Their Communication Style

• Do they explain things clearly?
• Do they make you feel comfortable?
• Are they patient with your questions?

6. Understand the Fees

• Get a clear breakdown of all costs
• Understand what services are included
• Ask about payment plans if needed

7. Make Your Decision

• Consider all factors: experience, communication, fees, and your gut feeling
• Don’t rush – this is an important decision
• Once you’ve chosen, get all agreements in writing

Remember, your attorney will be your guide through this complex process. Choose someone you trust and feel comfortable with.

Step 5: Complete Credit Counseling

Before you can file for bankruptcy, you must complete a credit counseling course from an approved provider. This course helps you understand your options and ensure that bankruptcy is the right choice for you. Your attorney can recommend approved providers.

Step 6: Stop Using Credit Cards and Taking on New Debt

Once you’ve decided to file for bankruptcy, stop using your credit cards immediately. Taking on new debt just before filing can look like fraud and may not be dischargeable in bankruptcy. Your attorney will advise you on what payments you should and shouldn’t make during this time.

Step 7: Gather and Organize Your Documents

Your attorney will need a lot of information to prepare your bankruptcy petition. Start gathering:

• Tax returns for the last two years
• Pay stubs or other proof of income for the last six months
• Bank statements for the last six months
• Mortgage documents or rent agreements
• Car loan documents
• Credit card statements
• Medical bills
• Any lawsuits or judgments against you
• List of all your assets and their estimated value
• List of all your monthly living expenses

Organizing these documents ahead of time will make the process smoother and could potentially reduce your legal fees.

The Importance of Timing

As you work through this checklist, pay attention to timing. Some actions, like large payments to creditors or family members, transfers of property, or taking on new debt, can cause problems if done too close to your bankruptcy filing.

Your attorney will guide you on the best timing for your situation.

What Happens Next?

Once you’ve completed these seven steps, you’re ready to move forward with your bankruptcy filing. Here’s a quick overview of what to expect:

1. Your attorney will prepare and file your bankruptcy petition
2. An automatic stay will stop most collection actions against you
3. You’ll attend a 341 meeting of creditors
4. For Chapter 7, your non-exempt assets may be liquidated; for Chapter 13, you’ll start your repayment plan
5. If all goes well, your eligible debts will be discharged

Throughout this process, your attorney will be your advocate and guide, handling the legal complexities while you focus on rebuilding your financial life.

Conclusion

Filing for bankruptcy is a big step, but with proper preparation, it can be the fresh start you need. This pre-bankruptcy checklist, especially finding the right attorney, will set you up for success.

Remember, bankruptcy isn’t the end of your financial story—it’s a new beginning. With the right preparation and legal support, you can navigate this process successfully and move towards a brighter financial future.

Take your time, follow these steps, and don’t hesitate to lean on your attorney’s expertise. You’re not just filing for bankruptcy, you’re taking control of your financial future. Good luck on your journey to financial recovery!

Where Can I Find Help?

Dealing with bankruptcy doesn’t have to be a single-person job. The bankruptcy lawyers at Parker & DuFresne will help you determine the best course of action to help you get out from under your debt and move forward to a debt-free future.

Call today at 904-733-7766 for a free consultation, or click the button at the top of the page to schedule online.