When you’re struggling to make ends meet and experiencing financial stress, filing for bankruptcy seems like a no-brainer. As bankruptcy rates increase, more and more people consider it an option to alleviate the stress of paying back creditors.
That being said, there are certain things you shouldn’t do to ensure a smooth bankruptcy process. If you’re considering filing for bankruptcy, here’s what you want to avoid!
1. Don’t Rush To File for Chapter 7 Too Quickly
Debt relief lawyers recommend filing for bankruptcy to reduce debt, but receiving a bankruptcy discharge isn’t something that’ll happen often. So, before you file for bankruptcy, it’s best to determine if now’s the right time to do so. You can only receive a 7 Chapter discharge once in eight years or six years after filing for Chapter 13.
You may want to consider waiting if you’re expecting to face even bigger financial problems during the bankruptcy waiting period. One example is if you’re receiving care for a medical condition and are racking up medical debt.
In that case, waiting until your treatment is complete is best. Once you file for Chapter 7, you won’t be able to file for it again. So, if you take on debt after filing for bankruptcy, creditors could seize your property or garnish your wages. Contact a bankruptcy lawyer if you need help https://attorneydebtfighters.com/.
2. Don’t Wait Too Long
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At the same time, you don’t want to wait too long. Putting off filing for bankruptcy gives your creditors enough time to file a lawsuit against you and secure lien rights to garnish your wages. Once you’ve been served liens, bankruptcy can provide limited protection. So, it’s best to file for bankruptcy before your creditor receives a judgment, as bankruptcy can stop the pending lawsuit and discharge your debt.
3. Don’t Use Your Retirement Funds
Many people make the mistake of using up their retirement funds to pay off a debt that could have been discharged by filing for bankruptcy. Before trying to pay off debts this way, consult a bankruptcy lawyer. They can help you navigate the process to improve your financial position without withdrawing retirement funds.
4. Don’t Provide Inaccurate Information
When filling out bankruptcy paperwork, you must provide accurate details regarding your assets, income, debt, and expenses. Providing inaccurate information could lead to perjury penalties, including fines of up to a quarter million dollars and twenty-year-long prison sentences.
Similarly, failing to file all the necessary paperwork could lead to the bankruptcy court dismissing your case. And if you fail to mention a specific creditor, that debt might not be discharged. If you’re putting together your documents, get help from an experienced debt attorney to make sure you don’t forget anything.
5. Don’t Try To Hide Your Assets
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While providing information about your income and assets, it can be tempting to hide some of your assets or sell them off. Doing this can result in criminal penalties and a refusal to discharge your debt. If you’ve sold any assets prior to filing for bankruptcy, you don’t need to worry about facing any penalties. Just be prepared to explain all your transactions to the trustee.
6. Don’t Take On New Debt
Make sure you don’t take on any new debt in the 70 to 90 days before filing for bankruptcy unless it’s to pay for necessities like food or utility bills. Otherwise, the creditor may object to your debt discharge by claiming that you took out a loan with the knowledge that you wouldn’t be able to pay it back.
The general rule is that you’ll be charged with presumptive fraud if you use your credit card to purchase a luxury item or take out cash advances within 70 to 90 days before filing for Chapter 7 bankruptcy. In this situation, you won’t get to discharge your debt.
7. Don’t Forget To File Income Tax Returns
If you’re about to file for bankruptcy and haven’t filed your taxes in the last two years, you’ll face problems in trying to discharge your debt. Income tax returns are necessary to determine your earnings, current assets, and whether there are any priority tax claims. Without your income tax returns, you won’t be able to fill out the paperwork, and getting a Chapter 13 repayment plan can become much more difficult.
8. Don’t File If You’re About to Receive Money
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Reconsider filing for bankruptcy if you’re expected to receive a large sum of money or substantial assets in the following year. This can include an inheritance, a major tax refund, or a settlement from a lawsuit. If you made a loan to someone else and they’re about to repay it, that counts as well.
After you receive the money, you could use it to settle your debts without needing to file for bankruptcy. If you feel like this applies to you, consider consulting debt relief lawyers for advice.
9. Don’t Go It Alone
Perhaps the most important piece of advice for anyone filing for bankruptcy is to not do it alone. It’s an emotionally draining and complex legal process that requires expert guidance from someone who knows the ins and outs of the system. They can help fill out your paperwork, ensuring that you don’t skip any important details.
They’re also responsible for ensuring that the debt discharge is complete so that you’re legally released from your liabilities after the bankruptcy proceedings. Even if you don’t want a debt discharge, speaking with a bankruptcy Chapter 13 attorney can help you determine the best course of action to restructure your debts.
Conclusion
Filing for bankruptcy is a complicated process, so it makes sense that there are certain things you shouldn’t do prior to filing. The most important things to keep in mind are that you shouldn’t try hiding your assets, purchase luxury goods, fill out bankruptcy paperwork inaccurately, or use your retirement funds.
It’s also important that you don’t forget to file your income tax returns or file for bankruptcy before receiving a large sum of money.
