Filing for Bankruptcy After the Holidays: Is Financial Stability Your New Year’s Resolution?
The holidays are a time of year when many people’s finances come into sharp focus. When planning their holiday travels or shopping for gifts, they are forced to accept that their financial condition isn’t where they want it to be.
If you are struggling with the realities of your financial condition during the holidays, you are not alone.
You also are not alone if you are thinking about filing for bankruptcy. Bankruptcy is a powerful tool that allows individuals and couples to restore their financial stability. If the holidays have you thinking about making financial stability your New Year’s resolution, hiring a bankruptcy lawyer to help you could be your path forward.
Preparing to File for Bankruptcy After the Holidays
If you are thinking about filing for bankruptcy after the holidays, there are some steps you will want to take now to help yourself get ready. There are also some mistakes that you will want to be careful to avoid. With this in mind, here are seven tips for preparing to file for bankruptcy in the New Year:
Tip #1: Start Gathering Your Financial Records
When you file for bankruptcy, you will need to have various forms of documentation available. Some of these you will need to file with the court, while others you will use to make informed decisions when consulting with your bankruptcy lawyer.
Even though you may want to focus on the holidays (and you absolutely should prioritize spending time with your friends and family), you should also take a few minutes here and there to start collecting the records you will need for your bankruptcy. You can use this list to get started:
- Bank account statements
- Credit card statements
- Pay stubs
- W-2s and tax returns
- Loan documents
Tip #2: Keep Paying Your Bills
When you are planning on filing for bankruptcy, it is important to keep paying your bills—at least to the extent you can. If you stop paying before you file, this could lead to unnecessary complications. Once you file for bankruptcy, the automatic stay will protect you from collection actions during the process, but if you chose not to pay when you could have, this could give your creditors grounds to continue seeking payment.
Tip #3: Don’t Rack Up Holiday Credit Card Debt
In this same vein, while you should keep paying your bills, you should not use your credit cards to pay for gifts, travel or anything else that you cannot afford. When preparing for personal bankruptcy, you need to manage your finances responsibly. Not only will this show the court and your creditors that you are serious about getting your finances back on track, but it will also help you avoid unnecessary issues—including defenses to discharge of your credit card debt.
Tip #4: Think About What You Want Out of Your Bankruptcy
As you begin gathering your records and continue managing your finances as best you can, you should also start thinking about what you want out of your bankruptcy. Broadly speaking, there are two main options:
- Chapter 7 “Liquidation” Bankruptcy – One option is to file for bankruptcy under Chapter 7. This is known as a “liquidation” bankruptcy because it involves using your available assets to pay down your debts as much as possible. Once you have paid as much as you can through liquidation, your remaining eligible debts will be “discharged” or eliminated.
- Chapter 13 “Reorganization” Bankruptcy – Your other main option is to file for bankruptcy under Chapter 13. This is known as a “reorganization” bankruptcy because it involves consolidating your debts into a single manageable payment plan. Once you make your payments for three to five years (as determined by the bankruptcy court), your remaining debts will be discharged.
Chapter 7 and Chapter 13 each offer their own unique benefits and limitations. As a result, it is important to take your time and make an informed decision. Once you contact a bankruptcy lawyer (see Tip #7), your lawyer will be able to help you choose the best path forward.
Tip #5: Learn What You Can Expect from the Bankruptcy Process
Regardless of which path you choose, it will be important to know what you can expect from the bankruptcy process. There are several steps involved, and while your lawyer will be able to take some of these steps for you, there are also steps that you will need to take on your own. Before you start the process, it will be important to make sure that you are prepared to see the process through to its conclusion.
Tip #6: Learn What You Can Expect Once Your Bankruptcy is Over
Along with learning what you can expect from the bankruptcy process, you will also want to learn about what you can expect once your bankruptcy is over. Going through the bankruptcy process can truly provide you with a new financial lease on life. As long as you manage your finances responsibly once the process is over, you will be free from unmanageable debt, and you will be able to rebuild your credit for the future—while setting aside some savings for the next holiday season.
Tip #7: Schedule a Free Initial Consultation with a Bankruptcy Lawyer
Even if you aren’t thinking about filing for bankruptcy until the New Year, it is a good idea to go ahead and speak with a bankruptcy lawyer. It costs nothing, and your lawyer will be able to provide you with personalized legal advice that you can use to make smart decisions during the holiday season. Talking to a lawyer can also help give you peace of mind, and this can help you enjoy the holidays with your friends and family.
Speak with Bankruptcy Lawyer Georgette Miller in Confidence
Are you thinking about filing for bankruptcy after the holidays? If so, we invite you to get in touch. To schedule a free and confidential consultation with bankruptcy lawyer Georgette Miller, please call 866-964-6529 or request an appointment online today.