Do not pay more than your normal balance due on any debt in the six months before you file. Otherwise this may be looked at as preferential treatment of a creditor.
You may choose to discontinue paying your unsecured (credit card debt not secured by real property) altogether.
Keep all Collection letters
Make a detailed diary of collection calls and contacts by collection agencies including dates, times and names. This will be useful for a number of reasons, least of all of which is protecting your federal rights not to be harassed by collectors.
DO NOT PURCHASE LUXURIES
Please do not go out and buy a new stereo system or a flat panel plasma television! This is detrimental to your ability to file and your money is better used to pay for the necessities of life, ie. food, housing, clothing, medicine. If you make purchases with the expectation of filing bankruptcy this is abuse of the bankruptcy process and you can be prosecuted. Again, do not purchase with the intent of discharging in bankruptcy
Gather your documents
People often file bankruptcy without preparing which results in problems recovering documents that a trustee demands. The trustee can determine whether your bankruptcy will receive a discharge. If you are unable to comply with the trustee you may not get your discharge.
You should gather at a minimum the following:
1. Last two years of state and federal tax returns
2. the last six months of paystubs for all employment
3. a Profit/loss statement if you own your own business
4. your credit reports (preferably all three or four bureaus)
5. your social security card and drivers license
6. bank statements for the last six months.
7. an appraisal or comparative market analysis of your house
8. a title report showing what liens are on your property and copies of your deed and mortgage
9. paperwork from any real property transaction in the last two and a half years.
10. credit bills for the last 6 mos
Credit Counseling Class
As of October 2005, the BAPCPA (new bankruptcy law) requires all debtors to take a class on credit. This must be taken within six months of filing the bankruptcy. Your lawyer can help you sign up for this course. It can be taken by phone, by internet or by paper.
Consult with an attorney regarding your eligibility to file
Make sure you talk with an experienced bankruptcy attorney as the learning curve is remarkably steep in this field. As of the BAPCPA in October 2005, there are new limitations on who may and may not file. This generally depends on the average of your gross income over the last six months. While their are certain figures which define the poverty level depending on how many dependents are in your household, you may still qualify even if you are over the poverty level depending on certain circumstances, exemptions, taxes and other intricacies that your attorney can help you with.
Finally, the moral dilemma!
Bankruptcy carries with it a stigma in our society that some people who may desperately need it's advantages cannot overcome. I offer the following in an attempt to ease this problem. The Old Testament (Bible) clearly provides for bankruptcy in Deuteronomy 15:1-3 and Leviticus 25:8-54. In Islamic teaching, according to The Quraan, an insolvent person should be allowed time to be able to pay out his debt... This is recorded in the Second Chapter (Surat Al Baqarah), Verse 280, as follows:"If the debtor is in a difficulty, grant him time till it is easy for him to repay. But if ye remit it by way of charity, that is best for you if ye only knew." If you are of another faith that follows other teachings, feel free to contact me and I will look into your texts.