5 Things You Need to Know Before Filing Bankruptcy

The coronavirus pandemic is causing lots of economical hardship. The unemployment has skyrocketed and businesses are struggling to survive. More and more people are looking at bankruptcy relief as one possible solution. We’d like to look at 5 things you need to know before filing bankruptcy:

1. Your 6-month-income. Your gross income received during last 6 months is considered in the determination if you qualify for Chapter 7 bankruptcy. Your gross income is then used in the means test to make that determination. For more information about the means test click here.
2. Only some of your property may be protected in bankruptcy. What property you can keep in bankruptcy depends on where you live. In Arizona, you can keep up to $150,000 equity in your home, household items up to $6,000, car ($6,000), bank account balance ($300), clothing ($500), etc. The property that is not protected (exempt) in Chapter 7 bankruptcy can be sold by the Chapter 7 bankruptcy trustee to pay your creditors. It is important to look at your property to determine if all property can be protected in bankruptcy. If you own property that would not be protected in Chapter 7 bankruptcy and you want to keep it, you can consider filing Chapter 13 bankruptcy. For more information discussing the difference between Chapter 7 and Chapter 13, click here.
3. What bankruptcy tools do you need? Do you just need relief from credit card debts or do you need more time to pay your mortgage or car loan? Your answers to those and other questions will determine which type of bankruptcy is right for you. For more information discussing the difference between Chapter 7 and Chapter 13, click here.
4. Bankruptcy timing. Do you expect to incur additional debts in the near future? Do you expect to receive any payments (such as tax refund or stimulus check)? Do you expect to lose job in the near future? Your answers to those and other questions will determine when is the best time to file bankruptcy.
5. Your recent payments. Have you recently re-paid money to your family member or friend? Have you taken a cash advance from your credit card? Have you recently made gifts to anyone? Your answers to those and other questions will determine when you should file for bankruptcy. It is also important to analyze such payments to determine the consequences of such payments in bankruptcy.

Please note that this article does not constitute a legal advice.  We simplified the law in order to outline what you should consider and what you need to know before filing bankruptcy.  What you don’t know, may hurt you! If you are considering filing bankruptcy, call the bankruptcy attorney in Phoenix at 480-425-2009 today for a free confidential bankruptcy consultation or contact us via our website and we will make sure your assets are protected and you get the maximum relief from your debts through bankruptcy.