- 1). Contact a bankruptcy lawyer before considering filing for bankruptcy. You will need an attorney eventually. It's best to work with a professional before beginning significant asset sales to ensure that it won't jeopardize your filing.
- 2). Review the asset exemptions for bankruptcy. Individual bankruptcy provides many protections, including exemptions for primary residencies; automobiles used for work and other crucial purposes; up to $8,000 in personal items like furniture, clothing, computer equipment and keepsakes; up to $1,000 in jewelry; and full exemption for special medical equipment. Selling assets may be unnecessary. Transferring assets fraudulently to another person to avoid sale during bankruptcy is considered fraudulent behavior.
- 3). Sell any assets that you don't wish to keep. In most states, the majority of liquid assets such as cash will be transferred to creditors during the bankruptcy process. It may protect your assets more effectively to avoid asset sales so long as the value of most of your property is below the exemption rate. Consult with your lawyer carefully. It's best to ensure that any money earned from asset sales goes towards basic living expenses, such as housing, food, fuel and utilities. It's also permissible to sell assets in order to pay for legal fees.
- 4). Begin the bankruptcy filing process with the assistance of your lawyer. In many cases, it can take months to go through the various requirements put forth by both the federal government and your home state. You will have to pass a means test and demonstrate that you have put forth a good faith effort to negotiate with creditors before successfully filing bankruptcy.
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