Tax refund season is a big time for bankruptcy attorneys. Clients who have needed to file bankruptcy for a long time finally get the money they need to file. Suddenly clients who were on a $100 a month payment plan can pay in full and get their case filed.
Now that tax season is over clients are back to the reality that they need to save up for bankruptcy. Unfortunately there are few shortcuts to saving up for bankruptcy. The common ways clients save up are as follows:
- Gifts from family and friends. A well timed financial gift from family or friends can make the difference between filing this month and next year. Before your friends or family make this gift speak with a bankruptcy attorney. Large financial gifts within the past 6 months coupled with a certain level of income can disqualify you from chapter 7 bankruptcy. Talk to your lawyer.
- Reduce expenses. Some expenses can be safely reduced before you file bankruptcy. For instance, your bankruptcy attorney may tell you to stop making minimum credit card payments on cards that will get discharged in bankruptcy. Yes, you’ve been paying on those cards for a long time, but the minimum payment can be put to better uses. Again, talk with your bankruptcy lawyer about reducing your expenses before bankruptcy.
- Work more. This is easy to say but hard to do. Many clients work as hard as they can but can’t seem to save up. Some ways to increase income include a second job or a stay-at-home spouse picking up a part time job. Once more, an increase in your income 6 months before filing bankruptcy can disqualify you from chapter 7 bankruptcy. Ask your bankruptcy lawyer if a second job will jeopardize your bankruptcy.
The theme here is to speak with your bankruptcy attorney before you receive a gift, reduce expenses or increase income.