A Chapter 7 bankruptcy and Chapter 13 bankruptcy are significant life events that require serious thought and preparation before you decide to file. Potential bankruptcy clients seem to procrastinate and wait until the last minute before contacting an Arizona bankruptcy lawyer to learn about their options. After all, most people dread having to file Chapter 7 or Chapter 13 bankruptcy.
Don’t be Depressed
Many debtors feel shame about the need to file Chapter 7 bankruptcy or Chapter 13 bankruptcy. That is a wasted emotion. No person could have predicted this devastating “great recession”. We are still experiencing record high job losses and increased household expenses (have you seen the price of milk lately?). Unemployment is slowly improving but still remains at historical highs. Today’s headlines tell us things are getting better, but any slight improvement seems like a miracle compared to where we were in 2009 and 2010. My point is this: Don’t feel shame. Don’t bury your head in the sand. Pick yourself up, brush yourself off, and take care of business.
Seven Steps to Prepare for Bankruptcy
(1) Fees. You will need to have the fees for your Arizona bankruptcy attorney and for the court’s filing fee. A Chapter 7 bankruptcy will cost about $1,200 – $3,000 in fees, depending on the complexities of your case. A Chapter 13 bankruptcy will cost more. For a detailed explanation of the costs to file bankruptcy, click here.
(2) Credit Counseling Class: You must complete a consumer credit counseling session and receive the class certificate that must be filed with the court before you file Chapter 7 or Chapter 13 bankruptcy. There are many courses available.
(3) Income and Budget: Review your income and expenses. An Arizona bankruptcy lawyer can help you identify wasted expenses. I just noticed on my own credit card statement that I had a reoccurring charge for a subscription I no longer use but neglected to cancel. You can only obtain a “fresh start” if you identify and modify some of the habits that caused you to have financial problems. It doesn’t matter whether you are rich, poor, young or old: we all need to scrutinize and make adjustments to our income and expenses.
(4) Itemize your debts: Determine who you owe and how much. Make a list of all of your creditors, addresses and current debt amounts. Pull your credit report for free at www.annualcreditreport.com. If you have been named in lawsuits or your home was recently foreclosed, make sure you provide to your Arizona bankruptcy attorney all relevant papers.
(5) Be prepared to part with some minor assets: Understandably, people are attached to their possessions. However, if you suddenly found yourself with decreased income, you may have to surrender a car with a high car payment. Have reasonable expectations and allow your Arizona bankruptcy lawyer to set realistic and achievable goals for your Chapter 7 or Chapter 13 bankruptcy.
(6) Timely provide accurate information: I always tell my clients that most (if not all) of the work we do together is everything before we file Chapter 7 or Chapter 13. I always tell clients to pretend I am the IRS auditing you. Take great care when completing my questionnaire. Provide to me tax returns, bank statements, pay stubs, and various other documents, some of which may be buried in your file cabinet or lost. The goal I have as an Arizona bankruptcy lawyer is to make sure everything is correct before you file Chapter 7 or Chapter 13. This will help insure a smooth bankruptcy after we file. Listen to and obey your Arizona bankruptcy lawyer.
(7) Educate yourself: Educating yourself with some basic bankruptcy information helps you to appreciate and assist your Arizona bankruptcy lawyer. Read everything you can on my bankruptcy blog. However, be cautious about what you read on the internet. Some of it is inaccurate and misleading.
It seems overwhelming, but with a competent Arizona bankruptcy lawyer, your bankruptcy should be smooth sailing