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How to Prepare for Bankruptcy

Cannon Law Offices, PLLC June 21, 2022

No matter how hard you work or how well you plan, it’s impossible to foresee the financial challenges that life has in store for you. While you can’t predict the future, you can control what steps you take toward financial relief. 

Enduring substantial debts that your income cannot alleviate can be stressful and overwhelming, but it’s never too late to seize back control over your life. After considering your options, you may have come to the conclusion that filing for bankruptcy is the optimal solution for your North Carolina household. 

Before officially entering the legal process of bankruptcy, it’s crucial that you prepare. While bankruptcy can provide debtors with a fresh start, it still has lasting impacts on your credit score. That’s where we come in. We can help you weigh your options and understand the difference between Chapter 7 and Chapter 13 so that you have informed guidance on which path could be best for you and your family. 

If you reside in or near Greenville, North Carolina, and you’re ready to take the next step toward a brighter financial future, don’t hesitate to contact our lawyers at Cannon Law Offices, PLLC for reliable legal advice on how to move forward. Let’s get you prepared for tomorrow, today.

What to Do When You’re Preparing for Bankruptcy in North Carolina

The first item on your bankruptcy prep checklist should be to collect proof of your income and other paramount documents. Because your income has to be taken into consideration during the qualification process, it’s important that you have the necessary information ready to go. Make sure you have filed your required tax returns and have copies of them along with your bank statements, employer pay stubs, and any other proof of income from the past six months. If you’re filing for bankruptcy for your business, it’ll be beneficial to gather monthly profit and loss statements as well as copies of any liability insurance policies. 

In addition to collecting income proof, you should also document your debt information accurately and thoroughly. These details will also be required to fill out your bankruptcy forms. Plus, in your first hearing after filing for bankruptcy, you will have to answer questions about your income, expenses, debts, and assets. Having a clear, in-depth understanding of all the details of your situation will only benefit you as you prepare for your hearing. And when you work with us, we’ll be there helping you every step of the way.

Another key thing to keep in mind during preparation will be to pay any debts that you may not want to be wiped out by bankruptcy. For example, you might want to make sure that a debt you owe to a close friend or family member gets paid back in full instead of being discharged by bankruptcy. 

But, paying off debts that are dischargeable before filing for bankruptcy can lead to roadblocks in your case, so it’s best to be selective about which loans you pay off and to stop any automatic payments you have set up before you file. 

More Examples of What NOT to Do Before Filing for Bankruptcy

Even when you’ve decided that you’re moving forward with bankruptcy, it’s still tempting to do anything you can to relieve some of your financial burdens. Maybe making some loan payments can help prove that you’re dedicated to paying off your debts, right? Well, not exactly. Keep in mind the following NOT to-dos: 

  1. Don’t wait until your creditor has won a judgment. While it’s smart not to rush into bankruptcy, you don’t want to wait too long, either. You’ll especially want to file quickly when your debt creditor has a lawsuit against you because, if you wait until your creditor wins a money judgment, they may be granted the ability to foreclose on your house, repossess your car, or garnish your living wages. 

  2. Don’t use retirement accounts to pay your debts. Bankruptcy could likely wipe out any debt that you’re considering dipping into your retirement account for. Plus, when you file for bankruptcy, you should be able to protect most of your retirement funds. When in doubt, it’s always best to speak to a knowledgeable attorney.

  3. Don’t take on any new debt. Unless it’s for necessities like food or utilities, deepening your debt can be a major red flag on your report. If you buy a luxury item within 70-90 days before filing bankruptcy, your creditor could object to your discharge and argue that you really don’t have the intention of paying back your debt. 

  4. Don’t transfer funds or property or move any other assets. You must be prepared to explain any and all of your transactions to your bankruptcy case trustee. So, attempting to hide, transfer, or safeguard your assets before filing for bankruptcy can result in your discharge being denied and you being subject to criminal penalties. 

  5. Don’t selectively pay off some loans within a year of filing. You’ll want to avoid looking like you’ve prioritized certain debts over others, otherwise known as making preferential transfers. These types of transfers can be reversed by bankruptcy, get returned, then equally dispersed to each of your creditors. 

Why You Should Seek Legal Counsel

No matter your situation, you deserve an opportunity to start anew. Experienced bankruptcy attorneys like ours at Cannon Law Offices, PLLC can make all the difference in a successful discharge. We take a collaborative approach to Greenville, North Carolina bankruptcy cases because we recognize the impact its outcome can have on your personal life. 

When you work with us, we help assess your situation and determine a favorable course of action that reflects your unique circumstances. More specifically, we can help you qualify for the chapter of your choice, determine when it’s time to file, and guide you in what choices to make so that you can keep the property you want. Our attorneys can also assist you in gathering essential documents for your bankruptcy forms.

Obtain the Skilled Guidance You Deserve 

Our bankruptcy attorneys are knowledgeable about the intricacies of bankruptcy law and we’re passionate about helping people move forward in life, regardless of the scope of their challenges. 

We’re all about integrity at Cannon Law Offices, PLCC. We serve residents and families throughout eastern North Carolina, including Greenville, the Outer Banks, Wilmington, Hyde County, and Washington County. We’re here to guide you through the legal process and help you resurface from debilitating debts with a clear path in front of you. Reach out to us today if you’re ready to file for bankruptcy and take back control of your life.