Once you know that a bankruptcy filing is inevitable, the urge to just go ahead and get it over with is only natural. After all, the sooner your chapter 7 bankruptcy gets filed, the sooner you can begin to benefit from the automatic stay that will not only get your creditors off your back, but possibly even keep you in your home. Before you file those papers, however, take a moment to ensure that you have made all the preparatory moves possible to get the most benefit from your filing as possible. To learn more about what steps to take before you file for bankruptcy, read on.

Homestead Exemption

For many, a home may be the most valuable asset in their possession, and the loss of that home is often what keeps potential bankruptcy filers up at night. In fact, the bankruptcy trustee can take possession of your home under certain circumstances, but every state offers filers exemptions on the value of their home.

For example, if your state allows you to take a $50,000.00 exemption on your home, and the value of the home is $200,000.00 but you owe more than $150,000.00 on your mortgage, you may be able to keep the home. The equity (deduct your home's value from your current mortgage balance to get a quick estimation) in your home is what makes it valuable to the bankruptcy trustee. The catch is that you must have resided in your current state for a certain length of time to claim that exemption. You may benefit a great deal by delaying your filling long enough to use that valuable exemption.

Personal Property Exemptions

Just as with the homestead exemption, every state sets dollar amounts for personal property exemptions, such as vehicles, art, jewelry and home furnishings. The unique aspect of this type of exemption is the opportunity to use the exemption from your previous state or your current state if you have recently moved. For example, in some states you have the choice of using the exemptions from your current state, your former state, or federal law for filing. Timing is key and the rules can be extremely confusing, so consult with your bankruptcy attorney for the particular rules in your state.

Reorganization of Assets

If properly done, you are permitted to use or sell some non-exempt assets and purchase exempt items with the proceeds. For example, cash from a bank account is not considered exempt, and is therefore likely to be surrendered to the trustee. If you are able to use that cash to make an allowable purchase, such as a vehicle needed to get you to work, your transaction will be allowed. The potential to run afoul of the bankruptcy laws are high with this type of transaction, so consult with your attorney before selling or transferring any assets prior to a filing.

Don't be too hasty to file before taking into consideration the above points. Your efforts toward a fresh start should not be impulsive, but well-thought out and in tandem with the advice of a bankruptcy attorney.

For a bankruptcy attorney, contact a law firm such as Demers Gagnier Inc.