If Bankruptcy May Be in Your Future, Here Is How to Prepare

In this tumultuous time, financial strain for individuals and businesses is far too common. Whether you have been on the verge of filing bankruptcy for a while, or have recently suffered financially due to COVID-19, seeking professional counsel can help ease the burden and confusion that the bankruptcy process brings. Here, the Baltimore bankruptcy attorneys at Grossbart, Portney & Rosenberg, P.A. discuss how to prepare for bankruptcy as an individual, and how seeking professional counsel early on can expedite the bankruptcy process.

Maintain Separate Financial Accounts to Avoid Bank Set-Offs

When preparing your finances before filing bankruptcy, it is vital that you take a deep look at where your individual debts lie, and where you currently have your checking and savings accounts. While uncommon, bank set-offs do occur, and can cause severe financial damage to the individual involved. Bank set-offs refer to a bank using your checking and savings accounts to repay debts under the same company. For example, if you took out a car loan or mortgage from the same bank that you hold your checking or savings accounts, the bank may have the right to take money from your personal accounts when you file for bankruptcy to begin paying back debt. Under Maryland law, banks do have the right to use money from your deposit accounts for set-offs if they are not properly secured, so maintaining separate accounts and securing your finances proactively can help avoid additional financial impact. 

Be Sure to Stop Automatic Payments Before Filing for Bankruptcy

Another extremely important step before filing for bankruptcy is to stop automatic payments. Once creditors receive a notification that you have filed for bankruptcy, they are generally supposed to stop your automatic payments. However, this doesn’t always occur, and substantial automatic payments that are not paused can push you farther back in your bankruptcy journey. Automatic payments taken out of your paycheck or bank account to pay creditors should be stopped immediately before filing for bankruptcy, as your payment schedule and financial status will change after filing. If automatic payments are taken out, the bankruptcy process can become increasingly difficult, leading your trustee or creditor to suspect fraud, or lead to your creditors being paid out of order. Working with qualified attorneys, such as those at Grossbart, Portney & Rosenberg, P.A., can ensure that there are no slip-ups when it comes to your payment plan, helping you navigate your debt with peace of mind. 

Notify Creditors and Debt Collectors of Your Filing Status

Finally, early on in the filing process, it is important to notify creditors and debt collectors of your bankruptcy status. While the Court should send notes to these individuals, personally reaching out to creditors and collectors can ensure that there are no misunderstandings when it comes to your assets. Especially when filing Chapter 7, in which assets are used as a form of repayment to collectors, providing clarity and maintaining frequent communication with credits is essential. Additionally, be sure to communicate with your bankruptcy attorney and trustee frequently to stay abreast of any changes to your bankruptcy status. 

Consult With Maryland Bankruptcy Attorneys at Grossbart, Portney & Rosenberg, P.A.

If you see bankruptcy in your near future, scheduling a free consultation with professional counsel can provide a sense of comfort and protection as you navigate this complex process. At Grossbart, Portney & Rosenberg, P.A., our priority is to help Maryland residents move through their bankruptcy journey so they can return to normal life as soon as possible. With the addition of virtual technology, our attorneys can serve Maryland residents from the Eastern Shore to Cumberland, MD.  If you are in the early stages of bankruptcy and interested in learning more, let our team help you achieve financial freedom by contacting our Baltimore office today