In many of my earlier blogs, I spoke about not allowing embarrassment or scruples to stop you from using bankruptcy to restore yourself to financial health. Believe me, I can appreciate how difficult a decision it is to face up to financial problems and seek help. I know that, by the time folks are sitting across from me at one of my four bankruptcy law offices, their stress levels have been climbing for months, if not years (see “Before Bankruptcy, The Brain Isn’t Interested In Reality”).
One important role of a bankruptcy lawyer is to make sure the financial disclosure documents are correctly prepared and ready to submit to the bankruptcy court. While debtors don’t necessarily set out to hide any information, often they don’t realize what needs to be disclosed, or they have trouble gathering the information. Maybe the debtor isn’t sure what kinds of income need to be reported on the forms, or doesn’t know how to correct some misinformation on a credit report. There might have been an investment or a piece of property the debtor owns jointly with a parent or other relative from years ago, and somewhere there’s some paperwork out there relating to that property.
What I like to do is help a debtor focus on the future, rather than on the mistakes or the problems of the past. So, while there’s certainly plenty of work to do – gathering and preparing all the paperwork, getting ready for the creditors’ meeting, and taking care of all the legal things, for me the most rewarding part is helping clients get ready for the “later”, for the emergence from bankruptcy.
What I mean is that there are some actions you can take now, before you even file bankruptcy, in order to begin rebuilding your credit, making things a whole lot easier for later on.
1. Open a new checking account at a bank or credit union where you don’t owe any money. Deposit just a small amount and then don’t use that account until after you’re finished with the bankruptcy filing.
2. Open a new credit card account. (“Why?” you may ask. “Isn’t that what I need least right now?”)
Tell the truth on the application, and if you get a card, even with a small amount of credit, don’t use it until after you file bankruptcy. (If you don’t owe any money on the card, you won’t even need to list it on your bankruptcy paperwork.) You’ll be able to use the new account, carefully paying off the debt each month, to begin restoring your good credit.
Habit #2 in Steven Covey’s book, Seven Habits of Highly Effective People, is this: “Begin with the end in mind.” That’s the way I advise my Indiana bankruptcy clients to begin the process of rebuilding their lives before, as well as after, filing bankruptcy!