If you are strongly considering filing for chapter 7 bankruptcy, you should know that preparation is important. The steps you take prior to filing can have a huge impact on your exemptions and the property you must surrender. Every state allows you to do some pre-bankruptcy planning, as long as you carefully follow the rules. Read on for how to best prepare for filing bankruptcy.

Your State's Exemptions

Each state has their own rules about exemptions, which is the property that you own that may be left out of the bankruptcy and is not subject to surrender. Usually this includes your primary residence, your personal clothing and belongings and certain dollar amounts of exemptions on your vehicles. For example, your state may allow you a $5000.00 exemption on your vehicle, so you would be able to keep the vehicle is it's worth $5000.00 or less.

If you have recently moved to a new state, the timing becomes important since you may have a grace period where you may use your former state's exemptions instead of your current state's exemptions. It's important to know what the exemptions are in both states and how long you have to take advantage of the more favorable state's guidelines.

Homestead Exemptions

Your home is a major asset, so keeping it safe from surrender is vital. The amount of equity you have in your home makes it a prime target for paying off your creditors. The homestead exemption provides you with a certain amount of equity that is safe from bankruptcy. For example, if your home is worth $250,000 and you have a homestead exemption of $100,000 and you owe $100,000 more on your loan, your home is safe from surrender. Again, the timing is critical since to take advantage of the homestead exemption in most states a minimum time of home ownership is required .

Reorganize Your Assets

You may be able to sell some of your assets that are non-exempt and purchase items that are exempt. For instance, the cash in your savings or checking account will most likely be non-exempt and subject to surrender. However, you are permitted to use that cash for certain purchases that are deemed allowable. This is a very tricky area and, without the help of a bankruptcy attorney, it is all too easy to run afoul of the rules. You and your attorney should be able to determine how to convert your assets in a manner that will not constitute fraud.

This is an area where the help of a bankruptcy attorney is vital.The laws concerning exemptions are confusing and complicated, but you can trust a bankruptcy attorney (such as Howard S. Goodman Bankruptcy Attorney) to guide you towards your fresh start and help you to retain as many assets as possible.