The process of filing for bankruptcy can be confusing and stress inducing. Because of this, many people misunderstand and mishandle the process, resulting in irrational or even unlawful choices that can result in anything from dismissal to criminal charges. In today’s blog, bankruptcy attorneys Groce & DeArmon explain what not to do before filing for bankruptcy to keep you informed and to help protect you from getting in trouble.
Don’t Lie About Assets
You are required by law to provide complete and accurate information about your financial situation. Knowingly misrepresenting your information is a criminal offense that can be punishable by fines or imprisonment. It is also important to include all pertinent information, because the bankruptcy court may dismiss your case if it is not complete.
Don’t Run Up Your Credit Card Debt
Credit used within 90 days of filing for bankruptcy usually will not be included in your bankruptcy debts. Furthermore, if a creditor has reason to believe that you ran up your cards before filing, it will challenge your case, and you may end up having to pay your credit card debt in full.
Don’t Take On New Debt
Just like running up credit card debt, it is extremely irresponsible to take on new debt before you file for bankruptcy. This means no new car loans, no new student loans, and no payday loans. The responsible thing to do is stop all use of credit as soon as you decide on bankruptcy.
Don’t Pay Off Your Creditors
Paying off a creditor after you have decided to go bankrupt is not allowed. If you do this, it may be determined that you are favoring one creditor over another and could hinder your chances at completing bankruptcy.
Don’t Drain Your Retirement
Draining your 401(k) or retirement accounts to stash away money or use it to pay off creditors is risky business. Not only is it not allowed to pay off creditors before bankruptcy, but money in retirement accounts are exempt from bankruptcy and cannot be taken by creditors.
Don’t Transfer Assets to Family or Friends
Giving your possessions or assets away to friends or family with the intention of getting it back later is dishonest and can result in the denial of discharges. If you do sell property prior to bankruptcy in order to pay living expenses, this is allowed but must be supported with an explanation.
Do Consult a Professional Bankruptcy Attorney
Bankruptcy law is very complicated and easy to misinterpret, and there are many moving parts that can go undetected. This is why it is extremely important to hire and consult with a trusted and experienced bankruptcy attorney who can help you through the process. At Groce & DeArmon, our bankruptcy lawyers have over 30 years of experience to help determine if bankruptcy is right for you and help complete your case. If you are interested in Chapter 7 or Chapter 13 bankruptcy, you can start by scheduling a free consultation. Call us at 417-862-3706 or visit us online to learn more.
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