Filing bankruptcy involves a fair amount of work to assist your attorney in preparing the petition. You need to gather documents, figure out a budget for your monthly expenses, and take a consumer credit counseling class. But although your life will certainly change (for the better) after the bankruptcy, your life also has to change beforehand. Here’s how.
You Will Stop Using Credit Cards
If you have a lot of credit card debt, then that can also be a sign that you are deficit spending, using the credit card to kick the can further down the road. Your short term needs are met, but your debt only goes up because you can’t afford the payments. That has to stop.
Even if that is not the case, the cards will be canceled when you file the bankruptcy (if they haven’t been already), so you might as well get used to life without plastic now. Besides, you also don’t want your creditors crying foul because you used your cards when you knew you were insolvent.
You Will Stop Paying Back Friends and Relatives
They have to be listed too, and the debts wiped out. I know you don’t want to, and it is embarrassing, but you have to. Payments to them going back one year from when you file have to be disclosed.
You also don’t want the further embarrassment of having the trustee demand the money back as a preferential payment to creditors! Pay them back voluntarily after the bankruptcy if you must, but stop doing it now!
You Will Stop Using Your Current Bank (Maybe)
Some banks like to “help out” the trustee by freezing funds in your bank account once you file. Wells Fargo is famous for doing this. If you have money in this bank, tell your attorney and move it elsewhere to avoid this problem.
Also, if you owe money to your bank, it might have a “right of setoff,” enabling them to take the money in your account to pay the debt upon filing the bankruptcy. Talk to your attorney on this.
You Will Quit Your Second Job
If you are killing yourself with a second job to pay your debts, then your life will be getting better! The bankruptcy will wipe out that debt, so there is no need for that second income.
Plus, that extra income may be hurting your chances at filing! Means testing counts income in the six months leading up to the filing, so the longer you do not have that extra income before filing the better.
You Will Stop Worrying That Bankruptcy is the Wrong Decision
Even though you decided to do this, and your attorney told you that it was your best option, stop worrying about what it will do to your credit! The sooner you release the anchor that is holding you underwater, the sooner you will float to the surface and have a better life.
Credit can be rebuilt after discharge. If it makes you feel any better, check all three of your FICO scores. If you have bad credit already, you have nothing to lose by going forward!
If you live in southern New Jersey and are considering filing bankruptcy, please feel free to call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.
If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.