Bankruptcy: What NOT to Do!
When getting ready to file for bankruptcy, there are always a few things that you SHOULD do. However, there are plenty of things that you most definitely should NOT do. Let’s talk about those!
Taking On New Debt
So many people get into a mindset of “well, I’m filing for bankruptcy, why not live it up?” Well, for one, the court could interpret this as fraud, which is no laughing matter when it comes to a bankruptcy case. If the court does suspect fraud, the case will be dismissed, and the filer could open themselves up to criminal charges.
When filing a Chapter 7 bankruptcy, you do risk losing assets. Hiding these assets, while a natural inclination, can also result in the court finding fraud. Your best move is to be transparent, laying bare all assets before the court, rather than hide them and hope the court doesn’t become aware of them. (Spoiler alert: they will find out).
There are two main “branches” for filing bankruptcy: Chapter 7 and Chapter 13. It is best to know which of these would be best for your situation. Discussing these matters with an experienced attorney can help you avoid this costly mistake.
Filing At The Wrong Time
Another mistake that consulting with an attorney can help you avoid, timing is extremely important when it comes to bankruptcy. For example, let’s say you have a rich uncle that is about to pass away, leaving you all of his assets. If you file for bankruptcy right after receiving your inheritance, you could risk losing it, while if you had waited longer, it may no longer be at risk. This is just one of many examples where timing is key.
Lying About A Windfall
Sticking with the rich uncle, if you are expecting a large inheritance, you should disclose this to your attorney and the court. If you do not, the court will most definitely view this as fraud. If disclosed to your attorney, he or she can give you more sound advice about filing.
Have questions about bankruptcy? Contact me today to discuss your options.