Use Bankruptcy To Get A Fresh Start
Bankruptcy is a serious legal proceeding that offers debtors an opportunity to recover, and creditors a chance to collect on debts they are owed.
Bankruptcy has a lot of steps, which may overwhelm you, at times. Certain actions you could take before you file can affect your ability to qualify. To keep the process running as smooth as possible, here are 5 things to avoid before you file bankruptcy.
- Don’t Go On Your Own
When creditors are hunting you down, you may be tempted to save a buck in any way that you can. Trying to save costs by filing bankruptcy on your own, it is not a good idea. Even the United States Courts strongly recommends you to find an attorney. The U.S. Courts suggests contacting your state and local bar association about available attorneys for hire and pro bono legal services in your area. While it is a good idea to educate yourself about bankruptcy proceedings, it is a really bad one to tackle the whole process on your own based on a $20 do-it-yourself kit that you bought on Amazon.com.
- Don’t Accumulate More Debt
The first step to solve any problem is to recognize the source of the problem. In this case, it is debt. Adding any form of new liabilities, such as credit cards or home equity loans, just before filing bankruptcy may create grounds to slap you with charges of fraud. Avoid creating any new debts within 90 days prior to filing bankruptcy. If you fail to do so, then creditors may object to the discharge of those new debts. Creditors will claim that you took out those new debts with no intention of paying them back.
- Don’t Move Assets Around on Your Own
You may be tempted to safe keep assets by selling or transferring them before filing bankruptcy. Doing this the wrong way may also end up costing you fraud charges or other criminal penalties. To prevent this from happening, give a full disclosure to your bankruptcy attorney. He or she will advise you whether you need to delay your filing and will work with you to protect your assets from judgments and debt collectors the right way.
- Don’t Disregard Your Taxes
No matter how long is your list of creditors, you can be sure that Uncle Sam will place himself at the very top. One of the requirements to file bankruptcy is to have submitted your tax forms for previous years. Don’t unnecessarily delay the process by failing to file your income tax forms.
- Don’t Selectively Repay Debts
It is understandable that you may want to make sure that your relatives and friends get the money back that they trusted you with before anybody else. However, you need to be aware that choosing to pay a relative before another creditoror may backfire. Paying back to friends and relatives within a year of filing bankruptcy may be considered a “preferential transfer” and undone by the court. This means that the court would try to get that money back from the same people that you were trying to protect.