Filing for bankruptcy can be a hit to your sense of esteem since it essentially means that you have managed your life poorly. However, if you have no money to pay for your outstanding debts, then there is literally nothing else you can do about it. Below, we look at a few things you should do before you file for a bankruptcy.
- Never Lie About Anything
Some people make the mistake of lying about their assets in the court. This is not only immoral but can have very severe repercussions. For example, you are required to disclose every single asset under your possession. But if you hide a few assets and the court later found it out, you will face criminal charges where you might be jailed for up to 20 years or fined a sum of $250,000 as punishment.
- Keep Your Hands Off The Retirement Account
When you are scrambling for funds to pay off your debts, you might be tempted to withdraw from your retirement account. That is a big mistake. When the court declares you as bankrupt, there is a very good chance that they won’t touch the retirement account and let you keep it. As such, taking out money from the retirement account when you can actually keep it away from the hands of the creditors is one of the most unfortunate things to do.
- Don’t Take New Debts
Avoid taking up any new debt when you plan to file for bankruptcy. If you do end up taking a debt within about 90 days prior to filing the bankruptcy, then the creditor can accuse you of fraud. They can argue that you intentionally borrowed money from them with no intention of paying it back. And if the court agrees with their viewpoint, you will be in a pretty tough spot.
- File The Income Tax
Ensure that you have been filing taxes regularly. If you are required by law to file tax, but haven’t done so in the past few years, then it can be troublesome. After all, your annual income will be determined based on your tax returns. Not having the tax returns of the past years will make it nearly impossible to complete the paperwork for filing bankruptcy. As such, you will be miserably caught between your inability to file for bankruptcy and angry creditors who will be seeking their money.
- Find A Good Lawyer
You have the freedom to represent yourself in the bankruptcy case. And some might see it as a tempting move. But it is advisable that you only hire professional lawyers like Fort Worth Bankruptcy Solutions to handle your case. They have been dealing with bankruptcy cases for several years and have all the required skills and experience to successfully get you declared as bankrupt. No matter how good you are, you simply won’t match up to professional bankruptcy lawyers. Why take an unnecessary risk and lose out on the bankruptcy? Hire a good lawyer and trust them to do their job.
- Beware The Scams
There are numerous fraudulent groups out there that will look to scam you off your money. Such groups usually represent themselves as ‘debt settlement services’ that will promise to help you arrive at an arrangement with the creditors, thereby avoiding the need for filing bankruptcy. Consequently, you will not only lose money, but may also have to face lawsuits from other people because of the scammer’s actions. So, never trust such fraudulent services or their claims. Only visit a reputed bankruptcy lawyer when you need help with bankruptcy.
- When Receiving Large Wealth
If it comes to your knowledge that you will be receiving a large amount of money in a few months, it is recommended that you hold off filing bankruptcy. Maybe you are inheriting the estate of a distant uncle or you just won a national lottery. Whatever be the scenario, don’t move ahead with the bankruptcy plan. Instead, wait till you have access to the wealth and maybe you can pay off all your debts and avoid being declared bankrupt.
- Avoid Preferential Loan Repayments
Never pay your debt to any creditor within 90 days of filing the bankruptcy. If you do so, then other creditors can accuse you of being partial to just a few creditors on the basis that you have been selectively paying out your loans. This is also known as ‘preferential transfer’. And if the court finds merit in their argument, they can direct the money to be recovered and disbursed to all the creditors in an equitable fashion.