Talking Money With A Bankruptcy Attorney

A bankruptcy attorney may become your go-to provider of information and assistance when it comes to making financial decisions about your future

. From the period of time when you decide it is a good idea to file until the final discharge occurs, you should talk to the lawyer about any major financial situations you are in or changes you need to make. In fact, you should be able to comfortably confide in this professional who is bound by law to provide factual information to you and keep it confidential.

Why It Matters

What you may not initially know is that the bankruptcy trustee, who works for the courts on behalf of the creditors, wants to know if you can make payment to your lenders. If there are numerous expenses that are considered unnecessary or unfair to one creditor and not another, the trustee may toss your case out and you may be unable to file.

Monitor Your Budget

One of the first things you can and should do when it comes to filing is to minimize any excessive spending prior to doing so. Discuss with your bankruptcy attorney what you should and should not purchase. Keep in mind that you should stop using any credit cards you have and plan to discharge. You should then set up a budget that allows you to keep your bills paid, but reduces any discretionary income you have. For example, your lawyer can tell you how much money you can spend per month on food costs, which is likely to include eating out.

Don't Favor Creditors

In most cases, there is a cap on how much money you can pay to one lender during the six months leading up to the filing. For example, if you owe your aunt $1000, but this cap is $600, the trustee can require your aunt to repay the $400 so it can be divided up between your creditors. Do not favor one over the other either. Do not pay more than you need to on secured loans, such as your home or car.

Avoiding Mistakes

Do not open new lines of credit right before you file. Avoid doing major, unnecessary home improvement projects. Find out if your tax return can be saved or if it must be paid to the trustee. Learn about the risks of taking money out of a retirement savings account, too.

Once the discharge occurs, you will find the process is far easier to manage your money. However, leading up to that time, talk to your bankruptcy attorney before you make any financial move. It could cause you to lose your case if you make the wrong decision. The trustee will find out about it, too.

by: Andrea Avery

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