Bankruptcy is an unfortunate occurrence that each and every one of us dreads. We all have bills to meet and debts to pay. If you are ever in a situation where you feel like you are unable to meet your financial obligations, you may be wondering what to do before moving towards bankruptcy. There are a lot of factors that go into considering bankruptcy, and a bankruptcy attorney can help make important decisions. Here are a few things you should consider before you make this decision.
Stop using credit cards
If you are contemplating filing bankruptcy, then you will need to stop using your credit cards. Why? Because once you file for bankruptcy, your credit card accounts are going to be off limits to you. You won’t be able to charge anything on them, and you will have to pay them off. In addition to that, if you are filing bankruptcy, your credit cards are going to be scrutinized by the bankruptcy court, and they are going to be used as a measure of your credit worthiness.
Find a way of receiving future payments
It is important to know that when a company is facing bankruptcy, there is a good chance that all future payments will be given to the court. Therefore, it is a good idea to find a way of receiving future payments without having to give them to the court. One way of doing this is to set up a new company that will be the recipient of future payments. In this way, the money will go to the new company, and the old company will still be able to receive the money. However, the new company will have to pay the court for the money.
Don’t put more money in your bank accounts
If you’re thinking of declaring bankruptcy, you should know that you won’t be able to get a loan or open a new credit card in the next five years. You’ll also have trouble renting an apartment, leasing a car, or getting approved for a mortgage. Your bank accounts will be monitored by the court, and they may be used to pay back to the creditors. Hence it’s a good idea to remove any automatic payments sent to your bank accounts or put money in them manually.
Have cash available
One of the biggest mistakes that people moving towards bankruptcy make is having no cash available. When you are moving towards bankruptcy, it is important to have a source of cash that you can use to cover your expenses while you sort out your bank accounts. The availability of cash will also depend on the kind of bankruptcy that you are filing. If you are filing a Chapter 7 bankruptcy, you will not have to worry about having cash available since you can use your assets to cover your expenses. If you are moving towards a Chapter 13 bankruptcy, you will have to make sure you have enough cash available to pay for your expenses.
If you are having problems paying your bills, having a cash fund of at least several months’ worth of your living expenses makes sense. This will help you get through a bankruptcy proceeding, which is likely to take several months. If you can’t do this, then you might want to consider other alternatives, such as debt consolidation loans. Having a cash fund will also help you during the bankruptcy process because you will be able to pay a bankruptcy attorney and other fees associated with the bankruptcy proceeding. If you don’t have the cash, then you will have to use credit cards, and this could get you back in debt.
Spend money down
If you are facing bankruptcy, you need to take action before you lose everything you have. One of the most important things you can do to avoid bankruptcy is to use your debt wisely. This means spending money down. Avoid putting yourself in a position where you are left with nothing to sell or borrow from.
Stop paying unsecured creditors
Before your company declares bankruptcy, you should have a plan in place for what happens to your creditors. If your company is solvent and you have the ability to pay creditors, you should be paying them. You should be paying them even if it means you must restructure your company and make tough decisions. If you don’t have the ability to pay the creditors, then they will be paid when you declare bankruptcy. By the time a company declares bankruptcy, the creditors should have already been aware that the company is insolvent and that the company is not likely to be able to pay creditors. In this case, the company should already have stopped paying its unsecured creditors. This is not an attempt to fool creditors – it’s a way to get the creditor’s attention so that they know to file a proof of claim.