Bankruptcy allows you to resolve insurmountable debt in a legal way. The bankruptcy laws provide you with a fresh start to your financial life. However, they are provided in good faith and assume you will comply with the provisions of the law. Here are five things you want to avoid if you’re thinking about filing bankruptcy:
- Be honest about your situation. You will need to provide your bankruptcy lawyer with complete and accurate data of your finances. I will help you ensure that we have all the pertinent financial information. On your bankruptcy paperwork, and at your 341 Meeting of Creditors, you are required to provide complete and accurate information about all of your assets, debts, income, expenses and financial history. You do so under penalty of perjury. If you knowingly misrepresent your information, such as fail to disclose an asset, you could be subject to criminal prosecution.
- File Your Income Tax Returns. You should make sure that at least you have filed tax returns for the two years prior to filing bankruptcy. Ideally, you should file all your tax returns. Failure to file income tax returns will stop your bankruptcy proceedings and make it nearly impossible for me to help you.
- Avoid Spending Sprees. If you’re contemplating bankruptcy, don’t go on a spending spree for at least 90 days prior to anticipated filing. These creditors may object to their debts being discharged. Also, it makes you look like you’re trying to escape paying for your obligations. Of course, I am not talking about routine expenses such as food, clothing, shelter, and childcare.
- Don’t Hide Assets. You will want to avoid transferring, selling, or attempting to hide any assets. If you do, you might be denied a discharge and even be subject to criminal penalties. The important thing to remember is: be honest with your filing and at your 341 meeting with creditors.
- Paying back loans. You have to be careful here. If you pay back a family member for a loan they gave you, that may be considered showing preferential treatment.
As in everything in life, good communication is the key. Transparency and honesty right from the start with your bankruptcy lawyer and the court will make the process smoother and ensure a better outcome for you.