What Are the Most Important Steps to Take when Filing for Bankruptcy?

If you’re experiencing financial hardship, often bankruptcy is the best solution. When your debts become overwhelming, the most rational resolution is to speak with a Licensed Insolvency Trustee to get on the track to financial freedom.

Here are some key steps to keep in mind when filing to bankruptcy. These steps will help you achieve financial liberation.

Step 1: Don’t do anything that will be considered fraudulent

When you file for bankruptcy, some of your debts will be discharged so you won’t have to pay those creditors. It is assumed that many people think about filing for bankruptcy for a few months before actually doing taking action. So borrowing, taking out credit, or using credit cards just before filing for bankruptcy can be construed as fraud, based on the assumption that you did not intend to pay in the hope that those costs would be discharged.

It’s also important that you refrain from transferring money, assets, or property. You may also instinctively choose to repay your family and friends before filing for bankruptcy, but this can complicate your case. Speak with your trustee about setting repayments aside.

Step 2: Make a new, lean budget

When you decide to file for bankruptcy, you should be prepared to save more and spend less as you try to get your finances, business, and other affairs in order. In the months following bankruptcy, you won’t be able to access credit, so you need to plan a new budget that helps you live within your means. Attend a pre-filing credit class for counselling so you can start tuning your mind about your new budgeting and spending habits. Find ways to cut your costs and build your savings.

Step 3: Find a knowledgeable Licensed Insolvency Trustee

Now that you are trying to reduce your expenses, it may seem like a good idea to file for bankruptcy on your own without the help of a Licensed Insolvency Trustee. Filing for bankruptcy is usually a stressful situation, and getting an experienced trustee who’s well informed about bankruptcy law can help ensure that you get everything done right the first time, so your case can be settled fast and you get back to your new plan.

Step 4: Organise your documentation

Your trustee will help you organize all the necessary documentation needed for your bankruptcy case. You should document your financial situation, listing your assets, debt, and expenses. As well, obtain copies of bills, bank statements, paystubs, tax returns, and other financial documents.

Final note

It’s important that you don’t lose hope in your journey through bankruptcy. Seek help from your trustee and family during this time, and once this difficult phase is over, you can start afresh without debt weighing you down.