8 Things To Think About Before You File Bankruptcy

Here are some things to consider before you file bankruptcy so you don’t make a mistake that could get you in trouble or cost you a discharge.

1. Talk to a bankruptcy attorney sooner rather than later.  Find out right now how bankruptcy can benefit you.  Most people who file should have been in to see a bankruptcy lawyer six months to a year before they made the appointment. Instead they struggled and fought to survive, draining all their savings and retirement, doing everything they could to keep from getting information that could have led to their financial recovery and a new life.

2. Don’t use your credit cards. Some credit card charges may have to be paid if they are made right before you file.

3. Don’t use your 401K or retirement account to pay debts. Your 401K and retirement account are protected in Mississippi. Leave your money right where it is.

4. Don’t worry about your tax refunds. Tax refunds are protected. Unless you owe taxes, Mississippi allows you to keep up to $5000 of your federal income tax refund, up to another $5000 of earned income benefits and up to $5000 of your state tax refund.

5. Do not pay back loans to family members or friends.  Anyone you owe, including your mother and father, brother or sister, and your best friend is considered a creditor. Paying them back before you file bankruptcy is considered a “preferential transfer”. This means you have given one creditor preference (more money) then you gave another. So do not pay back any loans before you file bankruptcy. You can always pay them back after you file if you desire.

6. Hire an attorney with experience. An attorney experienced in bankruptcy is critical to having a trouble free case and a smooth discharge. Attorneys that handle only bankruptcy cases are like doctors who specialize in only one area, such as a brain surgeon, or cancer specialist. The attorney will be an expert in his field and can help you maneuver the complicated and constantly changing bankruptcy process.

7. Don’t sell land or things or sign property over to family or friends. Talk to an experienced bankruptcy lawyer before you do anything like this.  Many types of property are protected by bankruptcy laws and Mississippi laws.

8. Organize your papers and documents. Get all of your creditor’s bills and statements together so you don’t leave anyone out. Better to have duplicate bills than to leave someone out.