Preparing for bankruptcy requires some clear thought and planning. Alberto Montefalcon is here to assist anyone who may need to consider filing a bankruptcy case under Chapter 7 or 13. Please schedule a consultation today at any of our three conveniently located offices. Wise bankruptcy debtors should take certain actions before filing to ensure that their money is available during the bankruptcy case.
Once a bankruptcy case is filed, the automatic stay, which functions as an injunction against creditors’ collection activities, immediately goes into effect. While the automatic stay prevents most creditors from continuing their collection efforts, there are still some situations where creditors may take a debtor’s funds. A setoff occurs when a creditor offsets the balance in one account (i.e., credit card account) with funds in another (i.e., savings account). Thus, a prospective bankruptcy debtor facing the possibility of a setoff should transfer the funds before filing the bankruptcy case.
Although creditors are required to cease automatic payments because of the automatic stay, it may not occur as soon as desired. If this occurs, the creditor will have to return the automatic payment or debit eventually. However, stopping all automatic payments well before the bankruptcy filing ensures that any funds which would otherwise be used for such payments are available for living expenses or other necessary payments after the bankruptcy case is filed.
Setoffs may also occur with funds in the possession of utility companies held as security deposits. Most people expect to get back their security deposits. Although it may be difficult, paying off utilities for electric, telephone, or gas services before bankruptcy is a wise course of action to ensure that a deposit is not forever lost. Keep in mind, if a delinquent balance exists with no security deposit, the utility company will probably require a deposit for future services. It is best to time the bankruptcy filing at a time when all utility balances are current.
Unless an attorney advises otherwise, prospective bankruptcy debtors should stop making payments on unsecured loans like credit cards. They should continue making payments on any debt secured by a piece of property that they wish to keep after the bankruptcy filing.
If you are behind on your debt payments and fear default or repossession, bankruptcy may a solution to keeping your motor vehicle. The experienced Sacramento metropolitan area/Northern California attorneys at the Montefalcon Law Offices are here to help you if your financial position necessitates the consideration of a bankruptcy case filing under Chapter 7, 11, or 13. Contact us online or schedule a consultation at any of our three conveniently located offices. Telephone our downtown Sacramento office at (916) 444-0440, our South Sacramento office at (916) 399-9944, or our Concord office at (925) 222-5929.