Five Tips to Ensure an Effective Bankruptcy

You have the right to file for bankruptcy protection, no matter how financially distressed you are. The purpose of court-ordered bankruptcy protection is to stop creditors from seizing assets that you depend on for your survival. When applicants submit documents complete with accurate information and follow the filing procedures correctly, the chances that the court will accept your application for bankruptcy protection are very high. While a bankruptcy filing may discharge many of your debts, bankruptcy does not always solve the underlying causes of your financial problems. As long as you have waited long enough since your last bankruptcy filing, you will have the right to file for bankruptcy again, although this should not be your goal. With enough planning, many bankruptcy filers can achieve a much better financial situation after their bankruptcy case. A New Jersey bankruptcy lawyer can help you see the big picture about filing for chapter 7 or chapter 13 bankruptcy.

Keep All Your Documents Organized

Filing for bankruptcy is a lot like filing an income tax return, except with more paperwork. The more organized you can keep your financial records, the easier it will be to get ready to file for chapter 7 or chapter 13 bankruptcy. If your finances are such a mess that you are unsure where to begin, just start putting all pieces of correspondence in a folder and set up an appointment with a bankruptcy lawyer.  Your lawyer will guide you on how to organize your financial documents.

Save Money to Pay the Costs Associated With Your Bankruptcy Filing

If you had enough money, you would not be filing for bankruptcy. Despite this, filing for bankruptcy is not free. It usually costs a few thousand dollars if you hire a lawyer to represent you in a bankruptcy case. You should start saving several months before you plan to file for bankruptcy. If you think that the cost of filing for bankruptcy will present a hardship for you, talk to your lawyer about these hardships at your first consultation.

Choose the Most Appropriate Bankruptcy Filing Category

Most individuals who file for bankruptcy do so under chapter 7 and chapter 13; other categories of bankruptcy filings are for businesses and public entities. In chapter 7 bankruptcy, the court discharges your eligible debts as soon as your case is complete, which usually happens within a few months of filing. The court also reserves the right to sell some of your assets to pay the proceeds toward your debts before discharging the balance. It will only sell assets that are non-exempt, meaning they are not necessities. Most people who file for chapter 7 bankruptcy emerge from the process without the court selling any of their assets. Even though the discharge of debts happens quickly in chapter 7 bankruptcy, the record of the bankruptcy filing remains visible on your credit report for an additional seven years.

In a chapter 13 bankruptcy case, the court facilitates negotiations between the applicant and the creditors until they agree on a repayment arrangement. The applicant makes payments every month for three to five years, and at the end of the agreed-upon repayment period, the creditors discharge the remaining balance of the debts.

Be Truthful on Your Bankruptcy Filing Documents

Inaccuracies and ambiguities in your court documents can delay your bankruptcy case. If you intentionally make false statements on your bankruptcy documents, the court will reject your filing and refuse to discharge your debts. False and inaccurate statements on bankruptcy documents are among the most common reasons for the court to reject bankruptcy filings.

Start Rebuilding Your Credit

Filing for bankruptcy gives you a fresh start to rebuild your creditworthiness. As soon as you leave the courthouse after submitting your bankruptcy documents, start taking steps toward a debt-free future. You cannot go straight from filing for bankruptcy to applying for a home mortgage, but you can start small. Secured credit cards are a good first step. With time, you will be able to qualify for credit cards with higher credit limits and eventually for car loans and home mortgages. Do not go right back to the cycle of applying for buy now, pay later arrangements and risky loans you are not sure you can afford to repay.

Contact a Monmouth County Bankruptcy Lawyer

Jonathan Goldsmith Cohen has helped thousands of clients successfully file for bankruptcy and then rebuild their credit and remain financially stable. Contact us today for a confidential consultation to discuss your case.