Happy New Year 2019 – Resolve to Make a Fresh Start Financially

As a Lakewood Bankruptcy Lawyer, I have seen bankruptcy used as a financial tool to accelerate a household’s financial recovery. Prior to filing for bankruptcy protection, a few helpful tips can help make your case simple and smooth.

Stop Automatic Bill Payments for Debts Being Discharged

Part of getting your financial house in order depends on identifying the debts you are currently making payments on. Many of those payments may be for credit cards, medical bills, or settlement agreements for old debts. Most of those will be discharged in bankruptcy, and once you have decided to file, you should stop making those payments immediately.

Switch Banks

Many consumers use one bank for many of their financial needs. If you have taken out a loan with the same bank where you have a checking or savings account, it is smart to switch banks prior to a bankruptcy filing. Many times, in the loan agreement with such a bank, you have given that bank a right to “offset” your bank account to pay the debt owed. Switching your accounts to a bank that you have never borrowed money from eliminates that risk.

Stop Using Credit Cards

There is a bankruptcy rule against discharging a debt which you knew would be discharged when you borrowed the money. It is difficult for lenders to prove “subjective intent,” however, so currently I see very few adversary proceedings challenging dischareability. Still, the 90 days prior to a bankruptcy filing can be examined by creditors to see if consumers are abusing the bankruptcy system. Once you decide to file bankruptcy, it is best to stop using the credit cards (and to stop paying the monthly bill!).

Manage Your Bank Account Balances

Many times, the best time to file a bankruptcy case is when your bank account balances are at their lowest. While many bank accounts are “exempt,” and not at risk in bankruptcy, the money is definitely safe if its already been spent on rent, food, healthcare, or other household necessities. Because we are in control of when a bankruptcy case is filed, we’ll work together to find a date when account balances are at their lowest during the month.

Following these pre-bankruptcy tips can help make your case simple and run smoothly. If you would like to speak with me about your financial situation, I’d be happy to speak with you during a free, initial bankruptcy consultation.