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Preparing for Bankruptcy

"Is there anything I can do to prepare myself for bankruptcy?"  

Yes, there are helpful steps you can take before contacting a bankruptcy lawyer and diving into the legal proceedings. Taking these proactive measures can help you navigate the process more smoothly and avoid unnecessary hurdles along the way.  

Deciding to file for bankruptcy is already stressful enough, so why not make things easier on yourself? By following the steps described below, you'll be better prepared and can approach the process with a bit more ease, reducing some of that unnecessary stress.  

If you realize as you're reading that you've already taken most or all of these steps, then it's time to get in contact with an attorney. The Law Offices of Marc G Alster is located in Hackensack, New Jersey, and serves clients throughout northern and central New Jersey counties including Bergen, Passaic, Hudson, Essex, and Union, as well as counties in New York such as Rockland, Westchester, Orange, and Putnam. In the area and need help? Call today.  

The Initial Steps to Preparing for Bankruptcy  

The first steps towards preparing for bankruptcy involve gathering all the necessary financial documents. This includes information about income, expenses, assets, and debts. Mr. Alster's and his staff's extensive knowledge and experience will help you focus on the information and documents that will be necessary for Mr. Alster to qualify debtors for Chapter 7 or Chapter 13 protection, as well as accurately determine if any issues are sensitive, i.e., could give rise to a contested case.  

Here's a detailed look at the initial steps:  

  1. Gather proof of income: This includes copies of tax returns and proof of income for the past six months.  

  1. Chapter 7 Means Test: The Means Test compares your income to the average income of households in your state. To qualify to file under Chapter 7, your average income must be below the median income in your state after reducing this figure by a number of allowable deductions. Mr. Alster will do this in our office.

  1. Compile a list of monthly living expenses: This is essential for Mr. Alster to determine whether any disposable monthly household income exists after paying for all reasonable expenses. You will be given the monthly household living expenses and a bankruptcy form at your consultation, but it would be helpful for you to consider all the expenses before coming to your appointment.  

  1. Creditors: Mr. Alster will procure a summary of the information in all your credit reports on file with the three major national credit reporting agencies for inclusion in your bankruptcy forms if you retain The Law Offices of Marc G Alster. However, it is important to know approximately how much debt and the nature of the debt that is owed to creditors at your consultation. Failure to have this information readily available may make it difficult or impossible for Mr. Alster to properly qualify and accurately advise prospective clients as to whether they qualify for bankruptcy protection at their consultations.  

  1. List all significant property owned and their value: This is true for more expensive items such as real estate and expensive vehicles. It is imperative that prospective clients know the fair market values of these significant assets, whether it be through discussions with real estate agents, having a Realtor's broker price opinion or a recent appraisal, or, regarding a vehicle, going on NADA's or Kelly Blue Book's online websites to determine the values.  

  1. Make sure you have filed all required tax returns: This is a requirement of the bankruptcy process if you earned enough money to have filed tax returns during the four years preceding the year in which the bankruptcy case is filed.  

  1. Paying off any necessary bills: This should be discussed with Mr. Alster first and should only be done only if you do not want these debts to be discharged in bankruptcy.  

  1. Stop automatic payments: If you have automatic payments set up for debts that will be discharged in bankruptcy, it's best to stop these payments if possible, pending the advice you receive from Mr. Alster at your consultation.  

  1. Provide all information concerning your assets, income, debts, and general finances honestly and thoroughly: Providing inaccurate or incomplete information in your bankruptcy petition can lead to your bankruptcy case being dismissed.  

Once all the necessary documents have been assembled, Mr. Alster will review your financial situation. Based on this assessment, he helps determine which type of bankruptcy is most suitable. Chapter 7 bankruptcy, often chosen by individuals wanting to quickly discharge most of their debts, allows for a fresh start. Alternatively, Chapter 13 bankruptcy enables individuals to reorganize their assets and create a repayment plan to clear their debts over time.  

Avoid These Common Mistakes Before Filing for Bankruptcy  

There are several potential mistakes and pitfalls that individuals may fall into when preparing for bankruptcy. Mr. Alster ensures his clients are well-informed and avoid these common mistakes. Here are some things to avoid before filing for bankruptcy:  

  • Do not transfer property or assets to family or friends: This can be seen as an attempt to hide assets from creditors and can result in the bankruptcy case being dismissed.  

  • Avoid incurring new debts or making large purchases: This could lead to accusations of fraud if it appears you have no intention of repaying these new debts.  

  • Do not hide or fail to disclose any assets or income: All assets and income must be declared honestly and accurately in your bankruptcy forms.  

  • Do not repay loans to family or friends: These payments may be considered preferential and they can be undone by the bankruptcy trustee.  

  • Avoid making preferential payments to certain creditors: All creditors should be treated equally in bankruptcy.  

  • Do not take out cash advances or use credit cards excessively: This could lead to some debts being excluded from discharge.  

  • Do not liquidate retirement accounts or other protected assets: Most retirement accounts are protected in bankruptcy, and liquidating them could lead to unnecessary loss.  

  • Do not ignore or fail to respond to creditor lawsuits or collection efforts: These can lead to judgments and garnishments, which could complicate the bankruptcy process.  

  • Avoid attempting to hide or undervalue assets: This could be considered fraudulent and lead to your case being dismissed.  

  • Do not transfer or sell property for less than its fair market value: This could be seen as an attempt to defraud creditors and could lead to the bankruptcy case being dismissed.  

  • Do not file at the wrong time: Timing is crucial when considering bankruptcy. Filing too soon or waiting too long can have consequences that could impact your case.  

  • Avoid using retirement funds unnecessarily: Most retirement funds can be protected in bankruptcy, so it is better to file before depleting these funds.  

  • Do not include bankruptcy information in your case carelessly or incorrectly: Providing inaccurate or incomplete information can lead to your bankruptcy case being dismissed.  

  • Avoid purchasing luxury goods and services on credit or taking cash advances: This could lead to some debts being excluded from discharge.  

Filing for bankruptcy is a complex process that requires careful planning and consideration. With the guidance of an experienced attorney like Mr. Alster, you can navigate this process with confidence. His extensive knowledge of bankruptcy law ensures that his clients are prepared to avoid common mistakes and achieve a fresh start.  

Your Fresh Start Begins Here 

Preparing for bankruptcy requires careful planning, and the guidance of an experienced attorney like Mr. Alster is invaluable. With his extensive knowledge of bankruptcy law and personalized approach, he can help clients navigate the process and achieve a fresh start. Contact Mr. Alster today in Hackensack, New Jersey, to schedule a free consultation and begin your journey toward financial freedom.  

Remember, facing bankruptcy is not the end; it's a new beginning. With Mr. Alster by your side, you'll have the support you need to navigate this complex process successfully.