The bankruptcy attorneys of Bodie, Attorneys at Law discuss nine considerations to make before filing for bankruptcy.
Too often, the decision to file for bankruptcy comes after a wage garnishment has started or after a bank account has been levied. Unfortunately, waiting for these events can make the situation even worse, as any levy or garnishment is unlikely to be recovered. As much as we may not want to deal with the harsh reality of a bankruptcy, it’s important to be proactive and have a solid plan of action rather than avoiding the situation.
- Review credit bureau reports. You are able to download all three bureaus’ credit reports for free. It’s important to investigate and not only evaluate what’s occurring now, but what has happened in the past. Even old accounts can lead to lawsuits or other collection efforts.
- View the public records section. You can see if creditor judgments are showing up in your credit file. As noted above, it’s vital to know ahead of time whether a bank levy may occur or a garnishment proceeding may begin.
- See if prospective employers show up under the credit inquiry section. Clients who recently began a new job and then had wages garnished are often confused as to how the creditor found out about the position. If you are applying for a job, you may need to authorize a credit check, which in turn may alert any creditors. Taking a look at the credit inquiry section of your credit report can help to answer these questions.
- See if your current employer is listed on your credit report. Collection agencies and creditors do their best to search for your bank and your employer. First, they’ll check your credit report, where they may find your employment information.
- Keep your bank account to a minimum. It has become easier for creditors to levy bank accounts, in part because they no longer need to levy the branch where the account was originally opened. They simply provide the corporate office with the judicial order authorizing a bank levy. If the creditor takes a look at your credit report and sees a credit inquiry, they will look for small banks and credit unions near that employer’s location. In the case that your rent or mortgage money is in that account when it is levied, it could be taken. Remember, filing for bankruptcy after the levy means that you are unlikely to get that money back.
- Begin your bankruptcy attorney payment plan yesterday. Rather than waiting, plan ahead. If you were making monthly payments before tax season, you may be able to pay off the balance after receiving your tax refund. Remember that there will be fees, so prepare accordingly.
- Stay smart during tax season. Creditors tend to be especially aggressive between February and April. They know you are getting a tax refund and that it will be directly deposited into your bank account. Keep in mind that a bank levy can occur at any time, even immediately after that refund lands in your account.
- Contact the creditor before they contact you. Avoid a bank levy or garnishment altogether by contacting the creditor. With any luck, you can reach an agreement regarding a payment plan.
- Don’t be afraid. There’s nothing worse than running from a financial crisis rather than addressing it. Facing it head on and taking action will help you to avoid the worst outcomes.
Understanding these nine considerations and acting proactively will help you to take the best approach to a bankruptcy filing. For more information on measures to take, contact an experienced bankruptcy law attorney at Bodie, Attorneys at Law today.