The Do’s and Don’ts of Filing for Personal Bankruptcy
Many people see filing for bankruptcy as a necessary evil. Fortunately, this is not true. Rather, bankruptcy is often a savvy decision to reevaluate your personal finances and set you up on a path to be a financially successful once again. And even though people rarely talk about filing for personal bankruptcy, it’s actually an extremely common occurrence. According to U.S. bankruptcy court statistics, more than 1.5 million people file for bankruptcy in the average year, so there is nothing to be ashamed of.
However, if you choose to file, there are some important things about the bankruptcy process you should (and shouldn’t) do. In this post, we examine some of those important do’s and don’ts.
Do: Be completely honest with your bankruptcy attorney
Bankruptcy lawyers are there to help you, but they cannot do their jobs if you withhold any information. That is why it is crucial to be completely honest from your first meeting. Even if you are embarrassed about certain parts of your past, your lawyer is not there to judge you. Above anything else, honesty is the best policy.
Don’t: Hide assets
Again, you will need to be forthcoming with your lawyer about everything you own. Period. This is so they can do a proper job of analyzing the best plan of action for your specific situation. Lying about assets, or “forgetting” to include them in your filing, is a federal crime. Not only can it result in your bankruptcy claim getting denied, it can result in jail time.
Do: Visit a credit counselor
In addition to your bankruptcy attorney, a credit counselor will serve as a great resource. They will help you settle your debts and create a future credit plan after the bankruptcy has gone through. Filing for bankruptcy isn’t a solution in and of itself; it’s a first step.
Don’t: Pick and choose who you pay back before you file
Some people think it is a good idea to pay back some creditors before they file, but the court system will see that as playing favorites. In the eyes of the law, it is similar to picking who you would like to pay back first, which could result in not paying back the rest. Rather, the trustees will spread out your payments to all creditors equally. Because the constant calls from collectors can be stressful, consult a bankruptcy attorney when in doubt.
Do: Keep making payments on things you intend to kee
If there are some assets you are planning on keeping such as your home or vehicles, then make sure to continue with your regularly scheduled payments as much as possible. To stay in good standing, you must keep these payments current.
Don’t: Make any deposits into your bank account
Do not deposit any money that is not considered part of your salary into your bank account. This is because when you claim your annual salary, it must always stay the same or it could be looked upon as fraud.
Never go through the bankruptcy process alone. A bankruptcy attorney is your best asset for protecting yourself in the eyes of the law and to ensure you have the footing to reclaim your financial future after the claim has been filed.