You’ve decided to file for bankruptcy. What now? First and foremost, hire legal counsel to help you through the process. An attorney will be familiar with the federal and state laws and can help you navigate each step along the way. Just remember, while it is important for you to know what you SHOULD DO, it is just as essential to know what you SHOULD NOT DO before filing for bankruptcy.
THE DON’TS OF FILING FOR BANKRUPTCY
If you intend on filing for bankruptcy, you don’t want to do anything that could jeopardize your ability to do so. Dealing with creditors and their malicious ways of getting you to pay can be stressful. Don’t let it lead you to any irrational decisions, like the ones listed below:
DON’T: Transfer Property or Money
Why: Transferring assets will not necessarily protect them, plus it raises a big red flag to the bankruptcy court that you may be fraudulently concealing assets.
DON’T: Pay Off a Specific Creditor
Why: Making a large and out-of-the-ordinary payment to a specific creditor in preference over others is frowned upon. It is unfair to other creditors that hold the same weight. The trustee may even sue that specific creditor to get the money back and distribute it evenly to all the creditors.
DON’T: Use Your Credit Cards
Why: If you are filing bankruptcy, you should stop accruing debt. In addition, taking a large cash advance or purchasing unnecessary and/or big-ticket items on the credit card may look fraudulent.
DON’T: Deposit Any Extra Money into Your Bank Account
Why: Any money in your bank account should belong exclusively to you. It should also only come from your income. Never hold money for someone else in your personal account. Or run business transactions through your personal account. Such deposits can be confusing and may appear. . . you guessed it, fraudulent.
DON’T: File a Lawsuit
Why: After filing bankruptcy, any money you are awarded in a lawsuit is transferred to the bankruptcy court. As a result, you may receive only a portion, or potentially none, of the money awarded. Ultimately, it will depend on your state’s exemptions.
Seek Legal Counsel
The best way to make sure you are correctly complying with your state and federal laws is to work with an attorney. Contact us to set up a free consultation with our experienced bankruptcy attorney and learn more about the process.