Everyone goes through a period of financial stress at some point in life. When you are at this point, you want to do everything to eliminate the problem. One way of doing this that requires proper planning is filing bankruptcy. However, when filing for bankruptcy, you must know how to do it the right way. Remember, bankruptcy courts are merciless, considering that many individuals tend to hide assets in an attempt to avoid paying. Here are things you must not do when filing for bankruptcy.
Not Consulting a Bankruptcy Attorney
The laws surrounding bankruptcy are complicated for an average person. Therefore, it is best to consult an attorney regardless of whether you are filing for chapter 7 or 13 bankruptcy. A chapter 13 bankruptcy attorney Los Angeles will help you protect your assets, even those at risk. Get an experienced bankruptcy lawyer to help you know the best bankruptcy for you, depending on the situation.
Lying About Your Assets
For any kind of bankruptcy, you will need to show your assets to determine if you are capable of repaying your debts. If you lie about the assets to save yourself, your application might be disqualified. So, make sure you provide accurate information of your assets, your expenses, income, debt, and financial history.
Moving Assets
Filing for bankruptcy requires you to give all the information about your assets. In this case, some people might attempt to sell or give the assets to friends or relatives. Don’t do this because the risk is higher. Your request might be denied, or you might be subject to criminal charges. If you sold some assets to cater to food, rent, utilities, or basically the basic things, be ready to explain this to the court with proper documents.
Racking Up New Debts
Unless you are borrowing to pay for necessities like clothing, food, and shelter, don’t rack up new debts. The creditor might accuse you of taking the loan with the intention of not repaying, and this will be treated as fraud. So, avoid taking in new debts if you want to be discharged.
Filing When Expecting Substantial Properties
If you are expecting considerable assets, you might have to wait a bit longer before you file for bankruptcy. The reason is that once you have the assets or money, you will not be bankrupt. You will not be discharged, especially if the money is enough to pay the creditors. If you are in this situation, consult your bankruptcy attorney for help.
Not Filing Your Tax Returns
If you are expected to file your tax returns and haven’t done it for the last two years, filing for bankruptcy might be a bit difficult. Your tax returns show your past and current earnings and your assets. Without filing your tax returns, filing for Chapter 7 or 13 bankruptcy is impossible.
Final Thoughts!
These are six costly mistakes you must not make when filing for bankruptcy. It is crucial to do enough research and work with an experienced bankruptcy attorney. Filing for bankruptcy is a complicated process that involves a lot of paperwork. So, lean on the help of trained professionals if you don’t know how to go about it.
