When your finances are not in order, declaring bankruptcy may be one way to turn things around. It can be an overwhelming process given the many documents you need to gather, forms you need to complete, and courses you need to finish. However, it may give you a fresh start in terms of getting your finances in line. If you are thinking of filing for Chapter 7 bankruptcy, below are some tips you might want to consider beforehand.
Analyze your debts
It is important to review all your debts before filing for bankruptcy. You want to have a complete list so that everything can be listed in the bankruptcy proceedings. You also want to know if there are any debts that are not dischargeable (like most student loans).
Learn about property exemptions
Every state has its rules regarding the type of property that you may get to keep upon filing for bankruptcy. For instance, most people can retain a modest car, household furnishings, or retirement accounts. Therefore, before filing for bankruptcy, it is essential that you protect things that you would like to keep before declaring bankruptcy.
Determine what to do with secured loans
If you are paying a secured loan, you will need to continue paying the creditor to keep the pledged property. You can either pay the creditor the current replacement value of the property in a lump sum (redeem) or continue with payments as per the contract terms (reaffirm).
Knowing more about bankruptcy laws will go a long way in protecting your rights. In addition, it will help you make informed decisions based on your current situation and expectations. Knowledge is power, especially at such a life-defining moment.