Take your time to plan when filing for bankruptcy
“Trees that are slow to grow bear the best fruit.”
–Moliere (famous French playwright and actor)
It goes without saying that filing for bankruptcy is a major life change. Ok, so it’s not quite the same as getting married or having a child. But, I would put it up at the same level as buying a house. And, just like buying a house, bankruptcy is not something you want to rush into. Now, some clients have no choice. They have a wage garnishment or some other emergency that we need to stop immediately, and there is little time to plan. But, if you don’t have an emergency, it’s really important to get your ducks in a row before we filing. One of the services we provide at O’Keefe, Rivera & Berk is to develop a pre-filing plan of action. When necessary, we’ll give you a checklist as part of our initial consultation. Here are a just a few common pre-filing recommendations:
Stop automatic account debits: If you have creditor payments which are being automatically debited from your bank account, it is important that you contact the creditors and request that they stop these debits BEFORE we file your case. We don’t want these auto debits to continue and interfere with your fresh start or your ability to consolidate in Chapter 13. Always remember that you are in control of your bank and wage accounts. No one except a Judge can force you to have auto debits, and, except in the case of a Court order, you have the power to stop them. Don’t let any creditor tell you otherwise. If you have a problem stopping an account debit, just let us know.
Remove yourself as authorized user from credit accounts: If you are listed as an authorized user on another person’s credit card, we suggest that you have yourself removed from the account prior to filing. Otherwise, your filing could affect the primary account holder’s credit rating, and could lead to the account being closed. And, if the primary account holder is a significant other, this could land you on the couch for the night! We want you to maintain a great relationship with the primary, because he/she is a ticket to improving your credit after bankruptcy. When the bankruptcy is over, we want you to be back on the account, because this helps to improve the credit score.
Convert auto leases into a purchase (Chapter 13 Only): Auto leases rarely have a term that will last as long as the Chapter 13 case (generally 5 years). If the lease runs out during the Chapter 13, you could be stuck replacing the car at a very high interest rate. To avoid this problem, we suggest that you contact your dealership and ask to end your lease early and convert it to a standard purchase. Generally, it will be much easier to do this before filing bankruptcy. If you need to buy a car during the bankruptcy, Court approval will be necessary and costs will be much higher.
Every case is different. At O’Keefe, Rivera & Berk, we take the time to advise you on the best pre-filing strategy in order to give your case the best chance for success. Please feel free to contact us anytime for a free consultation.