April 21, 2024

Importance of Pre-Bankruptcy Planning

Filing for bankruptcy can be made less stressful when you go through a pre-planning stage. Before you lay out the paperwork, seek a credit counselor or contact a bankruptcy lawyer to review your options and consider if filing is the best option.

What is Pre-Bankruptcy?

A pre-planned bankruptcy is an ideal option to prepare for a prospective bankruptcy. During this process, the individual or company contacts the creditors and creates a financial reorganization plan that is agreed upon by the creditors and shareholders. All of this work is done before any paperwork is filed in court.

Planning allows you to restructure your debts and continue working and making regular payments. Your new, reorganized plan is approved and monitored by the bankruptcy court. When you work alongside a lawyer, this professional helps you understand your rights and responsibilities as it pertains to bankruptcy law. Overall, you figure out if filing for bankruptcy is a viable option for your business.

What Should You Avoid Doing Before a Bankruptcy?

No matter how deeply in debt you are or how many payments you’ve made, you must follow bankruptcy law. The law helps you to evaluate all of your benefits as a debtor and keep as much money and property as you can.

Never hide your assets, sell property or transfer it in someone’s name before filing. These are acts of bankruptcy fraud that could be uncovered and become punishable in court. If you engage in fraud, you won’t be eligible to receive a debt discharge and will continue to owe large sums of money.

Another tip is to know your exemptions and non-exemptions before you file. Know the personal and business items that you can keep or that can be sold on the market. In addition, cash advances and some credit card charges add up to debts that cannot be discharged. There are time limits to know about and deadlines to file objections against exemptions.

Pre-Bankruptcy Planning: A Vital Option

The process is not always straightforward and simple to understand, so it’s often necessary to work with a bankruptcy attorney to analyze your unique situation. Filing for Chapter 7, 11 or 13 bankruptcy has a long list of advantages and disadvantages, so only a lawyer is qualified to look over your situation and decide if pre-bankruptcy planning is a good choice. Fair Free Legal Services is a provider of free legal services to anyone who needs to understand the bankruptcy process more.

Fair Fee Legal Services
8665 South Eastern Avenue, Suite 101 Las Vegas, NV 89123