Taking the first steps to effective debt management
The better prepared you are, the more effectively your attorney can advise you on your debt relief options. Before going to your first appointment, record essential information about your debts, assets, income and expenses. This not only gives your lawyer an accurate picture of your financial situation, but helps you get organized to create a successful debt management plan.
Determining how much you owe and to whom is a crucial aspect of the bankruptcy process. You may forfeit certain rights regarding debts you fail to include on your bankruptcy petition, so be thorough about listing all of your creditors and debts, including:
- Mortgages on your home and other real estate
- Car loans
- Credit cards
- Medical bills
- Unpaid taxes and tax liens
- Civil judgments
- Child and spousal support in arrears
- Property settlements
- Student loans
- Business loans
Valuing your assets can be challenging. Some property may have appreciated since the purchase date — such as real property or securities. Other property likely substantially declined in value — including electronics and automobiles. For purposes of your bankruptcy petition, you need only consider the market value. For example, you may have paid $2,000 for a new couch ten years ago that may only fetch $200 if you were to advertise on a sales site, in which case you would value your couch at $200 on your bankruptcy petition.
Your lawyer needs information about your income and expenses to assess whether bankruptcy is the right decision for you. Although you may think that bankruptcy is your only choice, negotiating creditor settlements might produce better outcomes. If you move forward with your bankruptcy, your income dictates whether you qualify for Chapter 7 or if you should instead file under Chapter 13.