Filing for bankruptcy is a major financial decision, and preparing properly can make the process smoother and more effective. Whether you’re considering Chapter 7 or Chapter 13 in Minnesota, taking the right steps before you file can protect your assets, improve your outcomes, and prevent costly mistakes. Here are the key do’s and don’ts to keep in mind.
Do: Gather All Your Financial Information
Before filing, collect complete documentation of your income, assets, and tax returns. Filing for bankruptcy requires full transparency, and having everything organized will help your attorney determine which chapter you’re eligible for and what exemptions you can claim.
Do: Understand Minnesota Exemptions
Minnesota offers two exemption systems: state exemptions and federal exemptions. Every case is different, and the right attorney can help you prepare a case with the exemptions that would work best for your situation.
Do: Continue Paying Essential Bills
You should continue paying secured debts like your mortgage or car loan if you plan to keep the property. Also maintain utility payments, insurance, and necessary living expenses.
Don’t: Use Credit Cards or Take Out New Loans
New debt incurred right before filing may be considered fraudulent and could be excluded from discharge. Avoid using credit altogether if you are thinking about filing. In that same vein, once you begin the process, many professionals recommend stopping payments on the debt once you decide you are going to file.
Don’t: Transfer or Give Away Property
Selling, gifting, or transferring assets before filing can be viewed as attempting to hide property. The court can reverse these transactions and it may jeopardize your case.
Don’t: Drain Retirement Accounts
Minnesota and federal exemptions usually protect retirement funds. Cashing them out not only creates tax penalties but removes assets that could have otherwise been protected.
CALL NOW FOR A FREE STRATEGY SESSION FROM AN MN BANKRUPTCY LAWYER AT LIFEBACK LAW FIRM
Filing a bankruptcy can be scary, but the right legal team can help you through these odds and ends. Whenever you are ready to start the bankruptcy process, reach out to Minnesota’s kindest and most helpful bankruptcy law firm at www.lifebacklaw.com. You will be so happy you did!
