Before Filing For Chapter 7: Things To Think About

Preparation makes everything go smoother and filing for bankruptcy is no different. You can help make your chapter 7 filing that much more worry-free if you prepare by considering the following about what not to do and what you should do. Read on to find out more.

Don't Lose Your Home

Having to surrender one's family home can make for some sleepless nights for some filers. In most cases, you won't need to worry about that thanks to what is known as homestead exemptions. Different in every state, exemptions are meant to prevent a filer from losing valuable property that they will need to help them make their fresh start after bankruptcy. In some cases, however, you must have owned your home for a certain length of time before you can use the homestead exemption.

Using Other Exemptions

Along with the homestead exemption are other miscellaneous exemptions to cover vehicles, jewelry, work tools, and more. However, some states allow filers to choose which state exemptions to use. Since each state has its own exemptions, they can vary a lot. Some states have generous exemptions for personal property and some do not. If you have recently moved to a new state, you might be able to file using the exemptions from either your previous state or from your current state. You only have a certain amount of time in which you can choose between the two. It's important that if you have this option, you take a close look at each state's exemptions and consult with a bankruptcy lawyer to determine what to do.

Do Some Pre-Bankruptcy Planning

Items that are not protected by exemptions could be subject to seizure by the bankruptcy trustee. With care, however, you may be able to rearrange things so that you won't lose property. For example, cash in a savings account might be subject to seizure. If you take that cash and purchase a vehicle, the vehicle might be safe using exemptions. You must disclose all financial transactions that occur in the months prior to a filing and the bankruptcy courts have the power to undo those they find illegal. Speak to a bankruptcy lawyer before you sell, buy, trade, or give away an asset, even if you did so several months ago.

In addition to the above, speak to your bankruptcy lawyer about your income. If your income is too high to file and you expect a drop in the next few months, it might be helpful to put off filing for a bit. Speak to a chapter 7 bankruptcy service to find out more.

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