Bankruptcy is a complicated process that is governed by a web of intricate laws. Suppose you are about to file for Chapter 7 or Chapter 13 bankruptcy. In that case, it is wise to consult a Greenbelt bankruptcy attorney to ensure you have a positive experience during this trying time. You should not do various things before filing for bankruptcy because they will negatively affect your claim. Read on to find out more about the rookie mistakes consumers often make before filing for bankruptcy.
Failing to consult an attorney
Attempting to file for bankruptcy without hiring competent legal counsel will undoubtedly be an unpleasant and inefficient process. Bankruptcy law is very complicated, and most consumers find it very hard to understand. An experienced bankruptcy lawyer will know all the subtleties at play and even have legal ways to protect some of your assets that may be at risk. A skilled attorney will also ensure that you do not make any of the mistakes in this list.Do not provide dishonest, inaccurate, or incomplete information
Bankruptcy paperwork requires consumers to provide complete and accurate information about their assets, incomes, debts, expenses, and financial history. Lying on your bankruptcy paperwork is a serious crime that can subject you to heavy fines or prison time. Failure to file all the required paperwork will lead to the bankruptcy court dismissing your case or requiring you to file the additional papers at an extra cost. Bankruptcy trustees will have access to all your financial information and are highly likely to find any false, inaccurate or incomplete information.Do not drain your retirement account
Most retirement funds are protected in bankruptcy proceedings and cannot be seized by your creditors or bankruptcy trustee. Therefore, it is a regrettable mistake to withdraw funds from your retirement fund in a bid to pay off your creditors because this will leave you in a very precarious position. It is also not a good idea to drain your retirement account to stash the money away since the funds are legally protected. Leave your retirement account intact when filing for bankruptcy because the money in there is untouchable.Do not transfer your assets
Resist any temptation to sell, move, transfer or hide your assets in an attempt to dispose of them as you see fit or safeguard them before filing for bankruptcy. Doing so is a criminal offense that may lead to the bankruptcy court dismissing your case. Hiding, transferring, moving, or selling your assets before filing for bankruptcy could subject you to criminal charges that result in heavy penalties or jail time. While it is not prohibited to dispose of your property as you see fit, the bankruptcy trustee will ask if any assets or property was given away or transferred within a year of your filing; giving a false answer to this question is what constitutes a crime.Do not incur new debt
Using your credit cards immediately before or after filing for bankruptcy is highly frowned upon. Any credit card purchases you make within the period of applying for bankruptcy (usually 90 days) are not included in the bankruptcy debts. This means you will have to repay your credit card debt entirely because the bankruptcy court could decline to discharge recent credit, which it may view as fraudulent borrowing. It is safest to stop using your credit card immediately after you decide to file for bankruptcy.Do not choose certain creditors to repay
The bankruptcy code prohibits preferential transfers. This is when a debtor makes a selective repayment of a loan to one creditor to the detriment of the rest of their creditors. Simply, you are not allowed to choose which loans you will pay off before filing for bankruptcy.No matter the pressure you are under, do not decide to repay certain creditors (even family members) before filing for bankruptcy because this is a self-defeatist move. The bankruptcy trustee will discover this transaction and sue the party who received the payment in a bid to recover the total amount repaid. Any out-of-the-ordinary payment to a creditor will be to the detriment of your bankruptcy filing.
