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Four Things You Must Do Before Filing Bankruptcy
- Identify your creditors and find out how much money you owe. This may seem obvious; but when you’re drowning in debt you will be amazed at how easy it is to lose track of how much you owe and to whom you owe money. A good starting place is your credit report. Visit www.annualcreditreport.com and download all three of your credit reports for free. Remember, old utility bills, rent payments and loans from friends and family will not be on your credit report; but they still need to be listed in your bankruptcy.
- Stop borrowing money. Once you decide to file bankruptcy you must immediately stop borrowing money from everyone. Don’t use your credit cards, don’t take out an equity home loan, and don’t borrow from your mom, brother or next door neighbor. If you charge something onto your credit card within 90 days before filing bankruptcy, you may be forced to pay it back.
- Gather your tax returns from the past two years and your pay stubs. You will need to provide paystubs for the six month period prior to filing bankruptcy.
- Keep all your property in your name. Do not transfer any property into the name or hands of others. For example, don’t hand over the deed of you real estate property to your parents prior to filing bankruptcy and don’t transfer money to friends or family “for safe keeping” while you’re in bankruptcy. This is illegal and could get you into a lot of trouble, plus your bankruptcy case could be dismissed.
- Protect your retirement accounts. Please do not withdraw money from your retirement account before filing bankruptcy. Retirement funds may be exempt during bankruptcy; but when you withdraw the money, it loses its exempt status.