November 1, 2021
Alabama Attorney Advocating for Debtor Rights
When you first decide to file for bankruptcy, you should consult a bankruptcy attorney. While it is possible to file for bankruptcy on your own, there is a risk that you may fail to include all your dischargeable debts or that you will not know how to respond to certain obstacles that arise. In addition to consulting an attorney, you should also be aware of certain steps to take when preparing to file for bankruptcy. At Grainger Legal Services, an Alabama bankruptcy lawyer can prepare you for filing and represent you throughout this challenging process.
Steps to Take When Preparing to File For Bankruptcy
When you file for bankruptcy, you are trying to obtain a discharge of most of your debts. In Chapter 7 bankruptcy, this means you will no longer have liability for these debts, and only a percentage of these debts will be repaid. In Chapter 13 bankruptcy, you will repay a greater percentage of your debts over a period of 3-5 years, but you will most likely obtain a discharge of certain debts without paying those creditors. Therefore, among the most important steps you need to take before filing for bankruptcy is getting your finances in order.
You should stop borrowing money, using credit cards, or taking out credit. Borrowing money or incurring debt after you have decided not to repay it can be construed as fraud. You should not repay an individual unsecured creditor $600 or more during the three months prior to filing for bankruptcy. You should also refrain from trying to transfer property, assets, or money in order to avoid it being part of the bankruptcy estate used to repay your creditors. Additionally, you should not try to repay friends or family once you have decided to file for bankruptcy. Your first instinct may be to try to favor those debts in order to make sure that your loved ones will be repaid. However, your trustee can set those repayments aside.
Once you file for bankruptcy, an automatic stay will go into effect. This stay is a legal order to most of your creditors to stop trying to collect debts from you. You should be aware that bank accounts and utility companies’ security deposits can be subject to a set off if you owe money to either the utility company or a creditor, such as a credit card account, associated with the bank account. The utility company can use the security deposit to cover the debt and then require you to put in a new deposit.
Although creditors are supposed to stop automatic debit and charges once they receive notice of the automatic stay and your bankruptcy, it may take some time for the company to take steps to stop the debits. You should stop the automatic payments long enough before filing for bankruptcy to avoid having insufficient funds to make a Chapter 13 plan payment or enough to live on if you have filed for Chapter 7 bankruptcy.
Consult a Knowledgeable Bankruptcy Lawyer in Alabama
It is important to be prepared to live on less once you file for bankruptcy and to get your finances and other affairs in order. At Grainger Legal Services, Alabama bankruptcy attorney Charles E. Grainger can counsel you on which steps to take when preparing to file for bankruptcy and help you navigate the challenging process of obtaining a discharge of your consumer debts. We maintain offices in Prattville, Montgomery, and Troy. Call us at (334) 260-0500 or contact us online to schedule a free consultation with an experienced debt relief attorney.