There are a few obvious steps to take before filing for bankruptcy, like getting your financial paperwork together and meeting with a New City bankruptcy attorney. There are also some things that you should avoid doing before filing. Let’s look at what you should avoid unless you want to make this process more complicated than it already is.
Why Should I Avoid Racking Up More Debt?
One thing you should definitely avoid before filing for bankruptcy is accumulating more debt. Do not max out your cards. Do not take out new loans. Keep your spending confined to the necessities.
If you add a bunch of debt before filing for bankruptcy, that can look suspicious. A creditor could think that you purposely charged up some extra debt and filed for bankruptcy to wipe your record clean. They can credibly accuse you of fraud and derail this entire process.
Why Should I Avoid Paying Down Debts?
This can seem counterintuitive, but you should also avoid paying down any debts that you have. Even if you have a bit of money and think that you should address at least one of your debts before filing, this can actually cause problems. This is because paying one or two particular creditors can be seen as “preferential payments.”
Here’s what ends up happening. You pay off Creditor A and file for bankruptcy. Creditors B, C, and D see that you paid off someone else and claim that it’s unfair. If you had money, it should have been split among all creditors. The bankruptcy trustee is likely to agree with this. They can then request the money back from Creditor A so that your assets can be evenly distributed.
Why Is Hiding Assets or Debts a Bad Idea?
When you file for bankruptcy, you have to do a full accounting of your debts and assets. Leaving anything out can cause a variety of problems, from delays to getting your bankruptcy case outright dismissed. So avoid trying to outsmart the bankruptcy court or your creditors. Give them a complete picture of your assets and liabilities.
This also means that you shouldn’t try to move assets around. You may think you’re smart taking your name off of a car or joint account, but your actions are likely to be discovered.
Do I Need a Bankruptcy Lawyer?
We do recommend talking to a lawyer before filing. Bankruptcy is a complex process, and mistakes or missed deadlines can lead to additional headaches that you just don’t need. An experienced bankruptcy lawyer can help you ensure that this process goes as smoothly as possible.
Talk to an Attorney
When you’re ready to learn more about the bankruptcy process, contact the Lauterbach Law Firm. We can tell you more about your options and if filing for bankruptcy is the best way for you to get a fresh financial start.
