Pre-bankruptcy planning might be the most important thing you do if you plan on filing bankruptcy. So make sure you’re working with an experienced New York debt relief attorney.
Pre-bankruptcy planning DOES NOT mean that you run up a big debt on your credit card right before you file for bankruptcy with the idea that you won’t have to pay it off anyway once you file. That will be viewed by the court and trustee as an abuse of the bankruptcy process. And that will seriously hurt your chances of getting a discharge (plus leave you responsible for the debt you just racked up).
An experienced New York debt relief attorney will help you figure out how to protect, organize and characterize your assets. For example, if you make an annual contribution to an IRA or retirement account, you are still allowed to do that. And on the topic of retirement accounts, IRAs, 401(k)s and other retirement accounts are exempt from creditors. So if you’re planning on filing for bankruptcy, DO NOT take money out of your IRA if you don’t need to. That’s the equivalent of giving money away that you don’t need to.
Other pre-bankruptcy planning strategies may involve using your liquid assets (i.e., cash) to pay off non-dischargeable debts such as taxes (though of course any decision to do this needs to be carefully weighed against other factors). Or using your money in ways designed to take better advantage of the homestead exemption or, in some cases the wildcard exemption.
An experienced New York debt relief attorney can also help you convert non-exempt assets to exempt assets before filing. However, this must be done correctly or it can jeopardize your case when you file.
If you have more questions about pre-bankruptcy planning, please contact fair debt collection practices act attorney Bruce Weiner for a free initial consultation.