In May alone, over 700 businesses have filed for bankruptcy across the United States, tallying a 48% increase compared with the same period last year. The sharp rise in bankruptcy filings is just one of the many adverse effects of the ongoing COVID-19 pandemic.
Bankruptcy, a legal procedure that helps entities wipe out debts, is rather complex. The preparation part alone is already overwhelming. That’s why hiring one of the best bankruptcy attorneys in your area is a must if you are filing for one for your business.
This article rounds up nine important tips experts recommend doing while preparing for bankruptcy.
Know that the process takes time. Bankruptcy can’t be completed overnight. It’s a process that can last anywhere from four months to even five years or longer. Hence, you must prepare yourself — physically and mentally — as you start your journey of freeing yourself from the rather anxiety-inducing situation of having too much debt.
Don’t acquire any more debts. Of course, this is the logical thing to do — after all, you’re trying to erase your debts. Nonetheless, there are still people who use credit cards just to buy non-essential things. At least three months before filing for bankruptcy, don’t tack up new debt as it can be used by your creditors as a counter-argument for your filing.
Honesty and transparency are important. Though filling out bankruptcy forms can be too tedious and overwhelming, you still have to uphold the value of honesty. Provide information accurately and be transparent even with the best bankruptcy attorneys. Take note that bankruptcy fraud is considered a serious federal crime.
Gather your income statements. Your income will determine if you’re indeed qualified to declare bankruptcy, hence, you need to gather copies of your proof of income and tax returns for the last six months.
Obtain copies of your credit reports. After gathering your income statements, you’d next need to collate credit reports. In relation to being honest with your bankruptcy forms, you are obliged to include each of your creditors so that the court can fully assess your request.
Create a list of your assets. You won’t only have to prepare your income statements and credit reports — you also need to list down your assets and their respective market values. These assets include real estate properties and vehicles.
Complete the credit counseling course. In case you don’t know it yet, you are required to finish a so-called credit counseling course if you want to file for bankruptcy. Available online, this will help you prepare for the complex legal procedure you are about to undertake.
Consult with your attorney for any queries. The best bankruptcy attorneys are there to help people out throughout the entire process. They can effectively and efficiently handle cases only when their clients are transparent with them. And they’re very much willing to explain in simple terms how the process works as well as its implications.
Understand that filing for bankruptcy can affect your credit score. Speaking of implications, you should also prepare yourself for this one. Most creditors will shut you out if you try to acquire a new loan — and it may take around two years before your credit rating can recover.
At Bolger Law, we have the best bankruptcy attorneys who can guide you through the often daunting and complicated process. We are your partners! Contact us today!