Filing a bankruptcy takes a lot of courage, and yes, there are a lot of procedures and processes that one has to follow when they are filing for bankruptcy. Unless and until you have a positive outlook towards your life, bankruptcy can turn and twist you as it is a life-changing experience. Most people would be under the assumption that hiding assets can help them win the case.
But, unfortunately, that is one of the most inappropriate things to do. Hiding assets would only make you guilty at the court of law and can lead to unpleasant outcomes. Similarly, there are a lot of things that you aren’t supposed to do when you are filing for bankruptcy.
If you end up doing these things, you may end up losing your dignity, and also you might be condemned in the court of law. You may even end up attracting huge penalties, and that can come as a blow to you. Hence, we always recommend you to not get into such things at any cost. In this article, we have written about the don’ts that you aren’t supposed to do when you are planning for bankruptcy. You can visit this website to know more.
1. Lying about your assets to the attorney
The first and the foremost thing that every individual going through bankruptcy must do is never lie about the assets. It is essential to declare everything openly in order to avoid unnecessary and unwanted attention.
Most of the people hide their assets without knowing that the court has its process to find them out. That can lead to a lot of other problems when your attorney fights over your case.
2. Waiting for counseling instead of doing it on your own
There are a lot of counseling courses that one has to take while filing bankruptcy. You must not wait for your attorney or anyone else to make you complete them. They are mandatory courses, and it is essential to have them in completion status.
3. Sharing your assets with your kith and kin
Giving away all your assets to your relatives and friends is again a mistake that a lot of people do. When the property is registered in your name, it is considered as your asset, and you should never give it away to your kith and kin, especially while filing bankruptcy.
4. Using all the credit cards
You might have a lot of other credit cards, and there could be balance available on those cards. But you must not run out everything on those cards. These things would also be tracked by the court easily, and they can again work against you in the court of law.
5. Trying for another loan
When you are going for bankruptcy, you must always maintain a low profile and should not be trying for another loan in parallel. When you are filing for bankruptcy, it means that you do not have anything with you. Hence, trying for another loan can indicate that you are hiding an asset or a source of income through which you can fulfill it.
6. Property transfer to family and friends
Never transfer your property to your friends or family because, exactly like the assets, properties given away to your friends and families would still be considered as yours. Perhaps, they can penalize you for these actions in the court of law.
7. Not spending time in filing the bankruptcy and depending on other
There are a lot of cases where you cannot file bankruptcy. Some of the loans, like the automobile loan, student loan, etc., do not come under bankruptcy. Hence, you may have to end up repaying the loan amount completely.
So, you must make sure to spend a lot of time researching the laws related to filing bankruptcy. Also, gaining knowledge about loans can be helpful, and this might also help you in understanding the process clearly.
8. Unaware of the process of bankruptcy
There are a lot of processes involved while filing bankruptcy. Most of the people depend on their attorneys completely to do all the work. But, a few attorneys would be extremely busy, and they might ask you to do certain simple procedures. If you are unaware of the bankruptcy rules and laws completely, then you might end up annoying the attorneys.
9. Filing bankruptcy until your medical conditions are stable
If you want to consider filing bankruptcy due to medical debt or expect to have a major medicinal treatment in the future, then you should not file bankruptcy until those are taken care of. Many complications can take place, which will cost you a consequent amount of money. You can lower your expenses if you have insurance coverage, but the insurance does not always cover all the expenses as there are specified norms and conditions.
10. Withdrawing money from your retirement fund
Some laws protect your retirement money from creditors, but the funds in your accounts will lose the protection from the moment you withdraw them. You will also bind to pay all the taxes and penalties for early withdrawal from your retirement accounts. You may not be able to discharge all those taxes and penalties in case of bankruptcy and this will cause you many problems in the near future.
11. Last-minute purchases and charges
The creditors will look at your account history when they notice that you filed for bankruptcy. Your activities may look suspicious if they see a lot of charges right before your filing. Also, some of the creditors may take an objection if they see any major purchases in approximately three months of filing bankruptcy. They can also file a separate lawsuit with the bankruptcy court so that you won’t be able to discharge that part of your debt.
Else, you may end up committing mistakes even during the simple process, and this can become a major blunder. So, it is mandatory to be aware of the bankruptcy processes and procedures.
Well, these are some of the things that one has to avoid committing while filing bankruptcy. If these things are done then, it becomes really hard to get out of the case, and no attorney would be able to help you at all.