Preparing for Bankruptcy

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The decision to file for bankruptcy can be one of the most difficult decisions that someone makes in his or her lifetime. Bankruptcy usually generates emotions of trepidation and grief and has very high stakes.

Fortunately, there are people who can help through this difficult time. There is always the option to file bankruptcy alone with the help of kits and books. But going it alone is not recommended at all as a good Illinois bankruptcy lawyer can help support claimants through the process and lobby for their interests in the court of law. Someone who decides to file bankruptcy him or herself will most likely stumble at some point and risk losing his or her assets or rights. Those facing bankruptcy should consult a bankruptcy lawyer to make sure that their bankruptcy filing is as stress-free as possible.

In order to prepare adequately for bankruptcy, filers need to meet with their Southern Illinois bankruptcy lawyer and organize their financial information so that their lawyer can be fully informed on the circumstances surrounding their bankruptcy filing.

Claimants should give their attorney a chance to peruse their documents, answer the lawyer’s questions, and evaluate finances. Among the many pieces of financial data they need to give their lawyer are:

  • A list of secured creditors and the amount owed to them. This includes mortgages on homes and other real estate, liens on car(s) and homes, or judgments on real estate.
  • A list of unsecured creditors and the amount owed to them. This includes credit card debt, medical bills, personal loans, and leases that have been broken.
  • A list of debts from store credit cards. Claimants should list store card debts separately because these debts may or may not be secured.
  • Up-to-date statements on all debts, including car loans, mortgages, personal loans, claims, or judgments.
  • Detailed information on all real estate holdings or interests. These can include investment properties and transfers, trailer or vacation homes, condos, timeshares, or regular sales. Claimants should be sure to include the address of the property, all individuals involved, all financial details of the property, and the date of the sale.
  • A record of one’s household income and expenses. Claimants will need to put down a figure of their take-home income every time they are paid and other income like bonuses or commissions. Filers should gather pay stubs for at least the past 6 months to present to their lawyer. Filers should also provide a detailed list of expenses. They can do so by first calculating living expenses, adding up the costs of rent or mortgage payments, health insurance, car payments, and utilities. They should also add in the costs of food, clothing, household expenses, and vehicle fuel and maintenance. Filers should be as sensible as possible with their expenses since the list of expenses is also a budget that they will most likely be living off after bankruptcy.

Bankruptcy filers can prepare these documents themselves or have someone else do it for them. There are certain non-lawyers who can help filers prepare bankruptcy documents but their services are not overseen by the state’s Bar Association and thus it is not recommended. Instead, claimants should ask if their bankruptcy attorney can perform these services for them or if he or she recommends someone who will.

While in the process of meeting with a bankruptcy attorney and even immediately before doing so, it is important for claimants not to make any drastic changes to their debts or assets as the bankruptcy court will scrutinize their actions and if they do something out of line, the court will reject their bankruptcy petition. Filers should avoid taking out any kind of loans or incurring more credit card debt. They also should not give out loans to others or accept significant amounts of money from others. Claimants are urged to consult their bankruptcy attorney before selling their assets.

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