Preparing for Bankruptcy
June 30, 2021
There are some signs that you might need to file for bankruptcy. Perhaps you are paying only the minimum on maxed-out credit cards or have fallen behind on your mortgage, car payment, or other loans. If you are overwhelmed, stressed by your financial situation, and are tired of being contacted by collection agencies, filing for bankruptcy might be the only way to find relief. If this is the type of situation you’re in, you are not alone. In 2020, nearly 7,800 people in the state of Nevada filed for bankruptcy.
It is not wise to file for bankruptcy without preparing for what happens when your debt is restructured through Chapter 13 or Chapter 7. You want to make sure you do not make missteps such as spending down retirement accounts to pay dischargeable debts, taking out a home equity loan to pay down one debt while acquiring other debts, or selling assets that would be protected even in bankruptcy. You need to know what to do and what not to do. In preparing for bankruptcy, it behooves you to hire an experienced bankruptcy attorney to guide you through the process.
Attorney Scott N. Tisevich helps clients in Reno, Nevada, Carson City, Las Vegas, and in Churchill, Lyon, Story, and Douglas counties get ready for a fresh financial start through bankruptcy. If you need a new beginning, he can help you prepare for it.
Call the Law Office of Scott N. Tisevich today to find out what filing for bankruptcy could do for you.
How Can I Prepare to
File for Bankruptcy?
Taking the right steps to prepare for bankruptcy can go a long way toward making your journey back to financial stability as smooth and efficient as possible. Here are four easy steps that you can take to prepare to file for bankruptcy:
Make sure you have filed your tax returns. You need to have filed your income taxes in the two years before prior to filing for bankruptcy. Most of the time, what you owe in income taxes cannot be eliminated in bankruptcy, so you need to pay them. If you are getting an income tax refund, you want it to come to you and not have that money used by the court.
Pay off necessary bills. You must always pay for things like child support and alimony. Bankruptcy will not get rid of those payments, so you should keep making them. You also need to pay insurance premiums on your home and car. If you want to keep them, make loan payments on them. You should also keep paying utility bills. Some utility bills you owe may be taken away in bankruptcy — but not all of them.
Stop automatic payments. Some people have payments for certain bills automatically taken out of their bank accounts every month. To prepare for bankruptcy, you should stop automatic payments to take control of what you pay and when you pay it. Your lawyer can help you with this.
Document debt information honestly and thoroughly. Under penalty of perjury — which means telling a lie when you swear not to — you must tell the court about everything you own, all the bills you have to pay, and all the money you make from your job or in other ways. If you do not tell the court about any money you owe, even accidentally, the court will not be able to take away or reduce that amount owed and you will have to pay it yourself. You must take time and be careful when making a list of this information so you do not forget something.
What Should I Not Do
Conversely, there are also numerous things you should avoid doing before filing for bankruptcy, including:
Do not pay dischargeable debts or use assets that will be protected. There is no need to use limited funds or assets to repay debts that can be discharged through bankruptcy. You should take advantage of the ability to discharge them and focus on debt that cannot be, such as child support payments. You also need to preserve assets that may be protected in the bankruptcy process — such as your home.
Do not wait until someone you owe money takes you to court. When you owe someone money and they decide to take you to court and the judge orders you to pay them, they can request to take money out of your paycheck (wage garnishment) or claim something you own like your house or car (a lien). Most garnishments and liens are not taken care of in bankruptcy so you would still owe that money.
Do not use retirement accounts to pay debts. Most of the time, you can protect your retirement account during bankruptcy. Do not cash it in before filing your case in court.
Do not acquire new debt. For at least three months before filing for bankruptcy, you should not spend money on things you don’t need. You should also avoid using all of the credit you have on your credit cards. You could be charged with a crime and held responsible for paying back all of that money.
Do not move assets. “Assets” are things you own that are worth money, like a house, a car, a savings account, or even valuable baseball cards. If you try to hide these things from the court, you could be charged with a crime. Sometimes, people sell something they own to pay a bill, child support, or even to buy groceries. If you do, you must make sure you keep all receipts of what you sold and what you used that money for. It is best to talk to your lawyer before selling anything you own.
Do not pay any debts to someone you know instead of paying other bills. If you owe a family member or friend money they gave you as a loan, paying them back before paying other creditors can get you into trouble with the court. The judge could order your family member or friend to turn over the money.
Call the Law Office of
Scott N. Tisevich for Help
As Benjamin Franklin said, “By failing to prepare you are preparing to fail.” If bankruptcy is to offer you a fresh financial beginning, you want it to be successful. That does not just happen on its own — you need to prepare for the process. To make sure you do that properly, you should retain an experienced and knowledgeable bankruptcy attorney.
Your attorney can help you assess your entire financial situation, give you advice, and discuss with you the type of bankruptcy you should file for or whether you should file for bankruptcy at all.
If you do file, your bankruptcy lawyer will help you with all the papers you need to fill out and file them with the court. Your lawyer will also be with you in court to help answer questions the judge might ask.
Scott N. Tisevich, Attorney at Law, helps clients in Reno, Carson City, Las Vegas, and throughout the Nevada counties of Churchill, Lyon, Story, and Douglas prepare for bankruptcy. Bankruptcy should make your life better, not worse. Preparation is critical to your success.
If the signs are clear that bankruptcy is your path toward relieving the stress of overwhelming debt, call the Law Office of Scott N. Tisevich today.