Preparing For Bankruptcy
Bankruptcy laws: based on equity
If you are considering bankruptcy, you must not continue to borrow on a debt that you plan to have discharged in the bankruptcy. This would be bad faith. Bankruptcy laws are based on equity. The theory is that it would be unfair to make you pay all of the debt under the circumstances. Preparing for bankruptcy includes the gathering of documents and getting your taxes filed. It includes keeping profit and loss records of your business or of your paid wages if paid outside of a payroll. Also gathering pay stubs, and doing inventory. It includes deciding which bills to pay and which bills you can’t afford to pay. Preferential payments and the use of exempt assets and income to pay debts are also issues, which require qualified legal advice.
Important: see an attorney now
If you think that down the road you might need to file a bankruptcy, it makes sense to see an attorney now. You certainly do not want to act in bad faith or do things that will be to your disadvantage and could have been avoided in good faith.
Consultation with an attorney experienced in bankruptcy is recommended for anyone considering bankruptcy for the purpose of avoiding acts in bad faith and to know what you can do in good faith to support your own interest.