5 Things Not To Do if Considering Bankruptcy
While the phrase itself is a bit daunting, filing for bankruptcy can be a viable route to aiding financial issues. If you or someone you care about is considering bankruptcy as an option to escape from the burden of debt, there are some key “Do Not”s to ensure that the case is processed as smoothly and honestly as possible allowing the best available outcome.
1. Do Not Be Dishonest or Negligent When Compiling Financial Information
In the process of filing for bankruptcy, there’s a lot of paperwork that requires you to be as honest and transparent as possible. This isn’t an enjoyable step, as no one likes to stare their financial troubles directly in the eye. But it’s of paramount importance that those individuals filing for bankruptcy don’t leave out any information of which they have knowledge, despite how embarrassing and uncomfortable this may be. Withholding necessary information can lead to criminal prosecution, but it can also mean your unlisted debts won’t be forgiven. Be as thorough as possible so your case isn’t dismissed.
2. Do Not Accrue Any New Debt After Filing for Bankruptcy
We understand this can be challenging, as bankruptcy is no quick process and there are expenses and important matters that must be taken care of between the time you apply for bankruptcy and the time your case is decided. Not only would you be adding to the amount of debt asking to be forgiven, but many creditors and legal teams can view these actions as a sign that the debtor never had any intention of paying their debts back at all. This—to put it plainly—is fraud, and comes with a slew of dangerous criminal charges. Better to avoid the temptation and pay necessary bills outright.
3. Do Not Assign your Assets to Other People
Speaking of fraud, here’s a big no-no. While it’s logical to assume that giving a large asset—like a home, boat, chunk of cash etc.—to a close family or friend for safe keeping is a smart move, it’s largely unnecessary and can suggest that you’re up to something sneaky. It’s best not to make your tough situation any worse, plus in many cases individuals who file for bankruptcy are able to keep their personal assets. Assigning assets and not disclosing them may end up requiring legal services from a criminal defense attorney instead of a bankruptcy lawyer.
4. Don’t Deposit Anything but the Bare Essentials into Your Bank Accounts
This means paychecks from work and very little else. To avoid your account looking fraudulent and any undue confusion during examination of your financial status, it’s a good idea not to add any funds from third parties to the mix. This includes checks from friends and family who want to help you through the rough financial moment and any sort of check from a business operation.
5. Reconsider Filing Entirely if a Large Asset Is Coming Your Way
This could come in many forms, but if some sort of financial asset—whether it’s a substantial tax return or family inheritance—is going to be in your ownership within the coming months you may want to rethink your options. While bankruptcy is a viable option, it may not be the best option if your financial situation evolves since there are many other ways to settle debt or pay back creditors. Best to meet with a knowledgeable attorney and weigh your options.