Smart Pre-Bankruptcy Moves To Make Now
When it's become obvious that your financial situation is not going to improve without taking drastic measures, you might want to pause for a second. Making the most of a major financial and legal action like a chapter 7 bankruptcy filing might mean taking part in some preparatory tasks. Read below to find out some things you can do right before you file that might mean a better bankruptcy experience.
Do some transferring and move your assets
Many people think that shedding assets prior to a bankruptcy filing is fraud, but not necessarily. Be sure to consult with your bankruptcy lawyer before you move assets around in any manner, but there are perfectly legal moves you can make right now that could protect your property. Some property is protected by exemptions but some property can be seized, however moving a piece of property from one category to the other is fine. For example, cash in a checking or savings account is usually fair game for the bankruptcy courts, but a primary vehicle is likely protected by exemptions. Using the funds in that account to purchase a vehicle could be a smart move.
Are you a recent resident?
You must reside in the state where you declare bankruptcy, but did you know that some states allow filers to use the exemptions from their previous state? Exemption amounts can vary and the higher the amount the more property can be protected from seizure. There are both personal exemptions, homestead exemptions (for your primary residence) and sometimes, vehicle exemptions. The ability to use the exemptions of your previous state varies depending on how long you've been a resident of the present state. You also may need to wait a bit if your state requires you be a resident for longer than you have been.
Divorce and bankruptcy at the same time
You can certainly file for both simultaneously, but doing one before the other might make more sense for you. Even if you intend to file bankruptcy as a single person, your income is evaluated along with your spouse's and if you make too much money you won't be allowed to file. Waiting until after the divorce is final might allow you to file, however.
On the other hand, filing jointly might bring more protection for your assets. Some states allow couples to "double dip" with exemptions which can enhance the probability of keeping more property. Filing before divorce also provides an easier time of dealing with marital debts since most of it will disappear with the filing. Talk to bankruptcy attorney services for more information about smart moves to make before you file.