If bankruptcy MIGHT be in your future, here is what you should do now.
If bankruptcy MIGHT be in your future, here is what you should do now:
If you’ve lost your job or struggle to pay your debt, you may need to file for bankruptcy. If that’s the case, you should ignore some common financial advice and start thinking defensively.
The coronavirus pandemic that upended the economy is also expected to send unprecedented numbers of people and businesses to bankruptcy court. Millions are out of work, and economic disruptions could continue until a vaccine is widely available, something that may be more than a year away.
If bankruptcy may be in your future, here’s what you need to know now.
Don’t wait to talk to an experienced bankruptcy attorney
(Call Ronald Cook, Esq. 888-275-2620)
The people who come out of bankruptcy, in the best shape, tend to be the ones who got expert advice early.
If you even think that there’s a possibility that you’re going to be in debt trouble, or you’re not able to pay something, seek a legal consultation before you make any kind of financial moves.
Chapter 7 liquidation bankruptcies can only be filed once every eight years, so you will want to file when you can erase the maximum amount of debt.
Don’t touch your retirement money. It’s never been a good idea to draw from your retirement funds. It’s a particularly bad idea if bankruptcy might be in your future. Few people in financial crisis now will be able to pay the money back. More important, money in retirement funds is typically protected from creditors and so should not be used to pay debt that could be erased in bankruptcy, such as credit cards and medical bills.
The new coronavirus hardship withdrawals allow people to take up to $100,000 from their 401(k)s or individual retirement accounts without penalty or mandatory withholding. The withdrawals are taxable, but people who can pay the money back within three years can amend their tax returns to get those taxes refunded.
Don’t let cash pile up – A cash buffer is important, but money in bank accounts can possibly be seized to pay creditors.
Don’t sell stuff – People are often advised to sell unneeded possessions to pay down what they owe. If bankruptcy is in your future, you may not need to sell these items. Check with an attorney first since the sale may be unnecessary.
Do not give away assets because a bankruptcy trustee (the person administering your bankruptcy case) could possibly sue the recipient to get the assets back.
Consider forbearance options. Because of the crisis, many lenders are allowing borrowers to skip some payments. The usual advice is to take advantage of such forbearance only if you really need to, since the debt will still have to be repaid.
If you are considering a bankruptcy, CLICK HERE to read a book which discusses “things to think about” when going through the bankruptcy decision making process.
If you’ve made the decision to file a bankruptcy, CLICK HERE to read a book which discusses how to file a bankruptcy.