Four Ways to Improve the Success of Chapter 7 Bankruptcy
Chapter 7 Bankruptcy is probably your final chance of regaining your financial footing. Your success with this drastic measure could give you a fresh start to rebuild your financial life. Here are things that you should do:
- Prove that your income can’t meet your financial obligations: Your claim for financial woes is unconvincing, if your income is significantly higher than expenses. Trustee will consider it unusual for people who file Chapter 7 Bankruptcy for having higher income than expenses. Your expenses should also be legitimate and cover all the essentials. As an example, it won’t make sense if you spend nearly a thousand of dollars each month for your pets or hobbies. If you have sizable income, which is higher than your expenses, then Trustees will wonder why you can’t pay your bills. If this happens, Trustee may ask you dismiss your cases and apply for the Chapter 13 instead, which allows you to repay your debt over time to creditors. So, before filing for Chapter 7 Bankruptcy, make sure that you do the right calculation and you are really in trouble financially.
- Don’t bank with the creditor: If you are about to file Chapter 7 Bankruptcy, make sure that you don’t have an account with the bank to whom you owe a lot of money. If you have such an account, you should make sure to close it immediately and keep a good paper trail. Open a new account at a bank where you don’t owe any money. You should do this because after you file Chapter 7 Bankruptcy, the bank may freeze your account and take the money in your account to pay some of the money you owe. It’s true that some banks can be that unfair and for some people, it happened. Even if you only have $500 in the account, you should withdraw it, because you can use the money to keep some food in the fridge for a few weeks.
- Don’t make any major financial decision: When you are having financial issues, you may be compelled to do something about. However, wrong attempt to control your finances, there’s a possibility that you will make it worse. If you want to make any decision or transaction, you should get all the necessary information about it. As an example, you could decide to work with a credit counselling service to deal with your debt. The service may manage to make a creditor to settle your account and forgive some of your debt. However, without realizing it, you could take on a tax liability. Any amount of money that creditors forgive could be taxable, depending on the local regulations.
- Don’t hide any information: Hiding any information that shouldn’t be disclosed can bring plenty of problems. After filing for bankruptcy, Trustee and other parties will seek to investigate your financial situation. When you are filing for bankruptcy, you shouldn’t hide and lie. Trustees have a good knack of discovering anything from untruthful people. A typical trustee deals with up to ten bankruptcy cases each day, so you can be sure that they are experienced enough to find something wrong with your filing document, if you hide something.