What Steps Must You Take before Filing Bankruptcy?

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What Should I Consider Before Filing Bankruptcy?

Completing the bankruptcy process can be challenging. There are several steps you should take to make sure your bankruptcy is advantageous for you. If you are debating whether to file for bankruptcy, you should consider all the options that may be available to you. It may be the case that there are other options besides filing bankruptcy, such as renegotiating a contract or rearranging your finances. If you do decide to file, you should consider the following tips:

What Should I Do before Filing for Bankruptcy?

What is the Means Test?

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), was designed to keep people with higher incomes from filing for Chapter 7 bankruptcy. The means test checks your income in order to determine your eligibility to file for bankruptcy.

One of the first steps you must take when filing for a Chapter 7 or Chapter 13 or bankruptcy is to complete a "means" test. You must submit either a Form 22A (for Chapter 7) or a Form 22C (for Chapter 13) to the Bankruptcy Court before the Bankruptcy Court will hear your case.

Passing the “means test” does not make you automatically eligible for Chapter 7 bankruptcy. The means test is only one requirement the BAPCPA imposes on debtors filing for Chapter 7 Bankruptcy. The debtor must still attend mandatory credit counseling and the judge still has the discretion to dismiss the case if the judge believes that the debtor is filing in bad faith.

How Do I File for Bankruptcy?

Bankruptcy is done by filing with the court, so it may help to consult an attorney at this state if you have not already. In addition to filing, you must submit a bundle of paperwork with the Bankruptcy court. This paperwork includes information about your:

For example, the schedule of assets should state what assets you own and how much you think each asset or class of assets are worth. Be sure to list all your assets or you may be violating the complete disclosure rule. The statement of affairs must also be filed. This document explains how and why you are filing for bankruptcy.

Bankruptcy law requires that the schedule of assets and the statement of affairs be filed with the court at most fourteen (14) days after you file for bankruptcy. It is highly recommended that you file the schedule and the statement with your bankruptcy petition unless there is an emergency, like if your home is being foreclosed.

What Should I NOT Do before Filing for Bankruptcy?

There are three important things a borrower should avoid doing before filing for bankruptcy.

Do I Need a Lawyer to File for Bankruptcy?

Since these requirements are so complex, it is highly recommended that you hire an attorney before starting bankruptcy proceedings. A qualified bankruptcy attorney will help make certain that you do not miss any crucial requirements that can get your case dismissed.

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Last Modified: 08-25-2015 04:19 PM PDT

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