Bankruptcy is not something that everyone should file on impulse. Although it’s possible to simply declare bankruptcy then follow up with the technicalities, experts recommend early preparation upon deciding to file for bankruptcy. This teaches people what is prebankruptcy planning and its effect on the actual filing process.
Getting to Know Prebankruptcy Planning
Just like any financial filing process, filing for bankruptcy requires prebankruptcy planning. Several procedures must be completed in the process, ensuring bankruptcy will go accordingly and ensure getting discharged of financial obligations incurred.
Aside from completing several bankruptcy procedures, engaging in prebankruptcy planning answers common questions a person filing for bankruptcy may have in mind. The concept of bankruptcy often scare a lot of people with the technicalities surrounding it and possible effect on their credit standing. Talking to a bankruptcy lawyer or bankruptcy expert will shed light to important matters a person should know.
Common Processes Done During Prebankruptcy Planning
There are many procedures to be accomplished before the actual filing process. It includes assessing current assets and financial status. During this time, an individual will know which properties can be exempted then do necessary transfer in case they are still non-exempt assets. Exempt properties are assets that can’t be seized by creditors, especially the unsecured creditors. This means the assets listed as exempted won’t be used to settle debts.
Planning also helps time bankruptcy process. There are several instances when people can get better exemptions in filing. These instances include people who are moving to a different state. New state residents needed to stay for a certain time before taking advantage of exemptions. Other technicalities surrounding exemptions help people time their filing process accordingly and maximize exemptions.
Prebankruptcy preparation helps people assess their other financial documents, payments, deposits, child support, and other necessary information that will be needed for filing.
Common Mistakes Prevented with Planning
A person filing for bankruptcy has higher chances of making a mistake on the filing process without correct planning. Planning with the help of an expert will prevent people from committing these mistakes and digging themselves into deeper financial-related problems.
Among these problems is hiding assets from creditors. Filing for bankruptcy requires debtors to declare all their assets, which will be used in settling their debts. However, some debtors “hide” their assets to ensure they still have an asset left after bankruptcy, which is a mistake with its own ramifications. Even if it’s inadvertently hidden due to lack of knowledge about bankruptcy, authorities will still consider it an offense and may subject the debtor to penalties.
With planning, a bankruptcy expert can spot these problems and keep debtors from incurring more issues with their bankruptcy.
Hiring an Expert to Assist with Planning
A bankruptcy lawyer or expert knows the ins and outs of bankruptcy filing. Hiring them for consultation and planning will be beneficial before filing process. Experts will guide debtors and recommend procedures that may work for the latter’s benefit.
Understanding what is prebankruptcy planning and the importance of working with an expert makes the filing process simpler. Planning ensures all needed documents are available and every asset is properly declared. Look for a bankruptcy expert online and start planning if you’re thinking of filing for bankruptcy.