Do you feel like you need to file for bankruptcy soon but wonder what you need to do to plan for it? Here are some suggestions for what you should do before you file.
Identify The Assets You'll Keep And Surrender
Part of the process of Chapter 7 bankruptcy is that you are going to have to liquidate some assets in order to pay for a portion of the debts that you owe. You can also keep property because it is exempt from liquidation. It's important to identify which assets you'll get to keep and be forced to surrender.
One asset that you may or may not get to keep is your vehicle. Each state has its own rules for automobile exemptions, and the value is usually pretty low. In some situations, you will have to sell an expensive car and only be able to keep a portion of the car's value. For example, if the exemption for vehicles is $5,000 and your fully owned vehicle is worth $9,000, then you would have to sell your vehicle and keep $5,000. You could then purchase a cheaper vehicle that is $5,000 or less so that you have access to a car.
Identify The Claims you Will Negotiate And Dispute
Be aware that all claims do not have to automatically be discharged as a part of Chapter 7 bankruptcy. In fact, using bankruptcy can be a good negotiating tool in order to work with a creditor to pay off a debt in full. You may ask for more favorable terms to pay back the loan, lower monthly payments, or a lower interest rate to make the loan more practical. That is why you should definitely make a list of the debts that you feel can be negotiated.
There are also going to be debts that you feel should be disputed and should not even be included in a bankruptcy filing. This can include things on your credit report that are simply incorrect. This could include an account that you've paid off in full but still shows up on your credit report as if you owe them money.
Even if a debt is fully discharged, disputing debts is important because it factors into how much creditors will get paid with your available funds. If someone is receiving payment for a debt that is not correct, it only takes away the payments to other creditors.
Reach out to a professional to discuss Chapter 7 bankruptcy.