1.            You have to be a good candidate for Chapter 7 bankruptcy.

Contrary to popular belief, there are limits on who can file for bankruptcy. You will most likely be legally insolvent, which means your debts are larger than your assets. Generally, your income has to be below the median income in your state. Your debts have to be mainly consumer debts. Finally, you want to make strategic moves so you are able to keep as many assets as possible under either the state or federal exemptions.

2.            Bankruptcy is all about timing.

Chapter 7 bankruptcy can only be filed once every eight years, so it’s important to choose wisely when you do file. For example, if you have $3,000 in credit card debt but know you have an upcoming $100,000 surgery without the insurance to cover it, it is to your benefit to WAIT TO FILE BANKRUPTCY until after your medical problems are resolved.

3.            You are expected to participate in the process.

Although your attorney organizes and presents all the necessary information to file bankruptcy, you are responsible to ensure the attorney has everything he or she needs to do so. This means keeping the bills and mail you might be avoiding versus throwing it out. It includes cooperating with the attorney’s requests for documentation in a timely manner. Finally, it is important to communicate any changes or updates in your status throughout the entire process. Your attorney can not be effective without your input, so plan to work as a team toward your common goal!

4.            Filing for bankruptcy relief is not inexpensive.

Sometimes when already struggling with financial difficulties, the fees required to file for bankruptcy might seem excessive. However, when you look at the amount of debt you can discharge in the process, the fees you pay are the best bang for your buck, sometimes getting ten times the return on the fee by discharging ten times the amount of debt. Once you have selected the right attorney for you, call to have their fees explained to you, and ask questions if anything is confusing or unclear. And as always, check with a qualified attorney regarding your specific situation.

Disclaimer of Liability: This article is provided as a public service by Attorney Laura L. Colt. While the information in this article is about legal issues, it is not legal advice nor legal representation. Because of the rapidly changing nature of the law and our reliance upon outside sources, we make no warranty or guarantee of the accuracy or reliability of the information contained herein.“

Please note: This is the second article in our series of three focusing on filing Chapter 7 bankruptcy. Please refer to LaRowe Gerlach Taggart LLP’s website for copies of previous articles.