What is involved when you file bankruptcy?
Believe it or not, the bankruptcy process is very easy. This is not to say that there are not any exceptions to the rule, but for most applicants bankruptcy involves accounting for three variables: your assets, how much money you earn and what your monthly expenses are. As long as clients are aware of these elements, there should not be any problems.
Difficulties arise when clients are not organized with their paperwork. Sometimes this can be hard, especially if the bankruptcy is the result of an unforeseen situation. Perhaps someone lost their job or got a divorce. Or maybe everything is well financially, but because of inadequate medical insurance they are stuck with a hospital bill they cannot afford. Regardless, clients must keep a cool head and maintain control over the process. They should track all of their monthly expenses to get an understanding of how they spend their money. They should also get a credit report to know exactly whom they owe money to.
What You Will Need to Disclose
So yes, when you file bankruptcy you must remain organized. If you plan on filing for a Chapter 7 or the less common Chapter 13 bankruptcy process, you will be required to disclose not only your creditors but also all elements of your financial portfolio. Again, this boils down to: your assets, your salary and your monthly expenses. If any of these variables are not properly accounted for, you may not be able to get a bankruptcy discharge.
No magic formula exists for achieving better organization. Any system will do, provided that it works well for your situation. This includes those who are hiring an Attorney to represent them. Since attorneys do not know your entire financial situation, you will have to give them accurate records if you want them to do their jobs properly. Anything that does not get disclosed will not get discharged.
Start With Your Mail
In any case, you can get started by organizing all of your mail. You will want to sort it based on:
- The company offering the bill and
- The type of debt involved.
Afterward, you will want to sort the bills further by their date. Start with your most recent bills and then go back to the oldest ones. At minimum, you should have 6 months of bills. Put them in a set of expandable folders. If you want to achieve superior organization, you can create additional categories for your debts. Mortgage or rent would go in one folder, credit cards in another and so on. If one of your creditors does not send monthly statements, use their name, address and account number(s) for your filing.
Note Collection Calls
For applicants who are still receiving collection calls, they should track each one as they come in. Take note of when the agency calls, how often they call and their address and telephone number. You should also know the number associated with the collections account. All this information will be needed for your bankruptcy. And, once you are given a case number, bill collectors must stop calling you or else they are breaking the law.
Using Accounting Software
After you have gathered all of your bills together, you can organize things even further with accounting software. Quicken is a great example, as it is one of the most popular programs for financial management. The reason for this is because of how powerful Quicken is. Through its easy to use interface, you can track not only your salary but also your monthly expenses. However, be aware that there is a downside to this program. Not only does it cost a fee, but you will also need an Internet connection to use it. The Internet connection is needed because you will be communicating with your bank through the program. If all this is a problem, you might want to try Mint.com. While you will still need an Internet connection, unlike Quicken it is distributed free-of-charge. It also has some of the same features as Quicken, including the ability to link your account to your bank. Best of all, if you get confused at any stage of the process, the program will give you several hints.
If you prefer to use something other than Mint, there are many options available. Some require money, while others are completely free. And like Quicken and Mint, they contain tutorials to help you with the software.
Ultimately, it does not matter which program you use, just as long as you are using something. Good financial management remains one of the most important skills you can have when you are filing bankruptcy.
Help Your Lawyer
Finally, when you get to the point that you are ready to hire a lawyer, remember they are being paid to help guide you through the bankruptcy process. They cannot resolve every issue regarding your personal paperwork or identification of bill collections. You are still responsible for all these things. In fact, before a lawyer agrees to work with you, you have to sign a special petition that states everything in your application is the truth. Remember, even the best lawyer does not know your situation. It does not matter if they are working in Raleigh or Wake County; the rules are the same all over. If you do not let your attorneys know what is going on, they cannot fully help you. As a result, you might end up with an important bill that does not get discharged. When this happens, attorneys have to reopen the case to add the bill on… if the judge allows this type of action. Should they say no, you are still responsible for the debt, despite the fact you went through bankruptcy.
Learn more about planning for bankruptcy.