You may want to jump at the chance to declare bankruptcy, to experience financial relief as soon as possible. However, this major decision must be well thought out first. In other words, you must ensure all your financial affairs are in order. This may only help you reap even more benefits from your bankruptcy proceedings. Continue reading to learn how to prepare for bankruptcy and how an experienced Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq. can help you do so.
How do I prepare my bank accounts for bankruptcy?
In your Chapter 7 or Chapter 13 bankruptcy proceedings, there are such things known as bankruptcy exemptions. Such exemptions are essentially used to protect your property from creditors during your case. This property may be deemed essential to maintain your basic needs and to continue functioning normally. Examples may include the house you use for shelter, the vehicle you use to commute to and from work, the tools you use for your work, and more.
With all that being said, you must understand that your bank accounts may, most unfortunately, be partially excluded from these bankruptcy exemptions. This means you must set them up properly before filing your bankruptcy petition.
Of note, New York’s Exempt Income Protection Act may require financial institutions to exempt certain funds in deposit accounts from being collected by creditors. A common example of this is the Social Security payments you deposit into your bank account. As of 2024, this exemption amount is set at $3,425. You must understand that you may lose any amount over this exemption amount. This may apply regardless of whether you have outstanding bills that you have not yet cleared.
So, a simple solution to this issue may be to pay off your outstanding bills until you make your bank account total less than $3,425. Your bankruptcy trustee may not have a problem with this, so long as you can prove that these outstanding bills were necessary (i.e., food, rent, medicine, etc).
What else should I do to prepare for bankruptcy?
Another possibility during your Chapter 7 or Chapter 13 bankruptcy proceedings is that your financial institution may freeze your bank accounts. This freeze may be to let creditors collect your funds to pay off your outstanding debts. Well, again a simple solution to this may be to use these funds to pay off your outstanding bills beforehand.
However, say that this freeze is allowing your creditors to collect the funds you have earned after your bankruptcy filing date. Well, this is something you must immediately address with your bankruptcy trustee. By providing them with the right proof, your trustee may rectify the situation. They may even go as far as lifting the freeze so that you may access these post-bankruptcy funds.
The time to act is now. So please pick up the phone and call a skilled Rockland County bankruptcy attorney from The Law Offices of Allen A. Kolber, Esq. We look forward to hearing from you.
