Deep In Debt? 3 Things You Should Know Before You File For Bankruptcy

You lost your job and now you're behind on all your bills. Creditors are calling day and night – they've even starting calling your friends and family. Don't ignore the problem. Bankruptcy protection will allow you to get out from under the debt so you can have a fresh start at financial freedom. If you've decided to file for bankruptcy, here are a few things that will make the process go more smoothly.

Gather All Your Bills

When you file for bankruptcy, only the bills included in the paperwork will be considered for discharge. That means if you fail to include certain bills, they will not be discharged – which means those creditors will still be able to go after you for payment even after your bankruptcy is discharged.

Protect yourself by gathering all of your bills. As soon as you know you'll be filing for bankruptcy begin gathering your bills in one central location. That way you'll be able to provide your attorney with a complete list of creditors.

Try to Pay Down Your Debt

If you have a few small bills, try to pay those off before you file for bankruptcy. The fewer bills you have to discharge, the easier it will be to recover from. You may want to consider selling assets and using the proceeds to clear up debts before filing for bankruptcy protection.

If you are filing for chapter 7 bankruptcy – which is a liquidation bankruptcy – you may be required to liquidate non-exempt assets, with the proceeds going to repair creditors. Selling your own assets prior to bankruptcy filing, may allow you to get more money for your property, which will allow you to pay off more of your debts.

Avoid New Debt

If you know you're going to be filing for bankruptcy, it's important that you avoid taking on new debt. This includes loans and credit cards. Adding new credit to a bankruptcy can give creditors the ability to sue you for payment, especially if they can argue that you took on new credit knowing that you couldn't afford to pay the debt.

Losing a job can have catastrophic consequences for you and your finances. If you've recently lost your job and can no longer afford to pay your bills, you may want to consider filing for bankruptcy. Speak to an attorney to see if bankruptcy is an option for you. Your attorney will be able to file paperwork that will stop your creditors from harassing you.

To learn more, contact a law firm like Hornthal Riley Ellis & Maland LLP