Filing for bankruptcy can help steer you down the right financial path. While it is a difficult decision, doing so can help you take control of your financial future. If you recently made this decision, you should know that many of the steps you take, or do not take, during this time will have a considerable impact on the success of your bankruptcy case. Today, we compiled a list of the so-called “do not dos” to avoid when filing for bankruptcy.
What to Avoid When Filing for Bankruptcy
File for Bankruptcy on Your Own
Filing for bankruptcy is a lengthy and complicated process. You will want to ensure you meet the bankruptcy requirements and comply with all bankruptcy proceedings throughout. You will also need to determine if you are filing for Chapter 7 or Chapter 13 bankruptcy. To save yourself the hassle of needing to fix bankruptcy filing errors, consult with an experienced attorney beforehand.
Fail to Disclose All Your Assets
You must provide accurate and complete information on your bankruptcy paperwork. Failing to do so could result in criminal charges for committing perjury.
Sell or Transfer the Title of Real Estate Properties Before Filing
When filing you will be asked to provide information about all your assets. It may seem tempting to sell, transfer, or hide an asset, but do not do this. You could be denied a discharge and may even find yourself facing criminal charged for doing so. If you had to sell real estate to pay for living expense, this is understandable, and you will not be penalized for doing so. Just be sure to explain this.
Forget to File Income Tax Returns
You will need to file your taxes to avoid future complications when filing for bankruptcy. You will have a difficult if not impossible time completing your bankruptcy paperwork. Also, the IRS will have no way to determine your tax obligations.
File When You Are About to Inherit a Significant Asset
You may want to reconsider filing for bankruptcy if you are going to receive a significant inheritance as you could use the funds to pay off creditors and get out of debt. Speak with a bankruptcy lawyer to determine if this is an option for you.
Wait Too Long to File
Waiting too long to file for bankruptcy leaves you vulnerable to creditor lawsuits. If a creditor wins, it is very likely your bank accounts and wages could be seized.
Pay Off Loans Before You File
In Florida, you are required to list ever debt you owe when filing for bankruptcy. This includes debts you may owe family or friends. While you may wish to pay off certain loans out of pride, this could set you back even further financially.
Rack Up More Debt
When you are in debt, it may feel overwhelming. As such, many individuals continue to collect more debt as they adopt the attitude of “well I am never going to get debt-free anyway so why not rack up more debt?”
Unfortunately, this attitude could harm you in the future. If you took out a cash advance or used a credit card to make a significant purchase within 70 to 90 days of filing for bankruptcy, then you have committed presumptive fraud and may not be able to discharge this debt. Your creditor can argue that you took out such a loan without the intention of paying it back.
Drain Your Retirement Accounts
A common financial mistake is to drain your retirement account to pay off debts. Bankruptcy can wipe out a significant amount of debt, so it would be advisable to learn your options first before getting rid of the retirement account you worked so hard to create over the years.
For assistance with your bankruptcy case, do not hesitate to contact our firm online or give us a call at (407) 753-4111.