Leaving your case to an experienced New York bankruptcy lawyer is the first step on the to-do list before filing bankruptcy, but it's not the only step. There are many things debtors should do (and not do) before they file, and the more organized and mindful debtors are, the easier the process will be and the more effective the result. Here are six steps debtors can take before filing that don’t include talking to a lawyer.
- Waiting can be worth it. Understand that filing bankruptcy sooner, particularly chapter 7, is not necessarily as advantageous as delaying filing. One reason is to not rush the process, for example, ensuring you have enough time to take the required pre-bankruptcy debtor-education course. Another is that filing later can help keep your average monthly income beneath the means test threshold or ensure that large purchases are outside the windows for luxury purchases or cash advances.
- Don’t make any large purchases. Speaking of luxury purchases and cash advances, don’t make those or any other irregular purchases. The look-back window for each is 70 days for cash advances over $950, and 90 days for consumer debts greater than $675. Even if debtors stay below these levels, they might still trigger scrutiny by the trustee. Needless to say, scrutiny is not something you want in your bankruptcy. Even ceasing all credit-card use is a good idea.
- Don’t write checks immediately before filing. Also, if you pay for anything by check, then it’s a good idea to file bankruptcy after they clear or use cashier’s checks instead. Your account balance needs to match what your register and bankruptcy forms say.
- Look at your bank’s policies regarding bankruptcy filing. You signed many documents before opening a bank account, and undoubtedly they included (or referenced) what the bank would do to your accounts or credit-cards if you filed bankruptcy. Some banks will freeze accounts; others won’t. It’s best to know up front, whether by checking its Web site or by calling.
- Consider changing banks. Relatedly, if your bank will freeze your account, then you might want to deposit your money at one that will not. Be sure to update your direct-deposit information for your income.
- Check your automatic withdrawals. If you pay bills automatically, then some of them might not be worth continuing, particularly if they’re for debts you intend to discharge in your bankruptcy. Disabling these features or closing your account at that bank can prevent needless withdrawals for debts you don’t intend to pay later.
The steps are among the easiest to take before a bankruptcy, so doing them or being mindful of them will help you avoid some of the most preventable problems in a bankruptcy. Talking to an experienced New York bankruptcy lawyer will help ensure that your case goes smoothly.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact me at (718) 855-6840 for a free initial consultation.
This article originally appeared on my blog 6 Steps to Take Before Filing Bankruptcy.
