People who are in dire financial straits need to think about options for reclaiming their finances. One option is bankruptcy, but those who are considering this choice must ensure that they aren’t doing anything that is going to negatively impact their case.
Remember that the decision to file doesn’t mean that you are skipping out on what you owe. Instead, this is a legal option that lets you get back on track financially.
Avoid new debts
If you are planning on filing for bankruptcy, don’t take on new debt. Opening up new accounts or making charges might lead to the creditor claiming that you took on the debt without having the intention of paying it back. This may result in that debt not being discharged on the basis of fraud so you would have to pay it off in full.
Only pay normal bills
Your normal bills will still need to be paid, but don’t make any large payments on credit accounts. Making a large payment to a creditor might result in a claim that there are preferential transfers in your case. This means that you have a creditor that received benefits greater than the other creditors. It is possible that they will have the money taken through a lawsuit later. You definitely shouldn’t pay debts that are to family members or friends because of this.
Keep your retirement funds
Almost all retirement accounts are considered exempt in bankruptcy proceedings. Don’t drain those accounts in an effort to pay off debts if you are planning on filing for bankruptcy. It is always a good idea to discuss your case with an attorney prior to touching the retirement account to pay creditors if you want to file.
Always give accurate information
You can’t be dishonest when you file for bankruptcy. Every form you fill out must be factual. Any inaccurate statements are considered fraud and can lead to your bankruptcy being thrown out. In some cases, not being honest can lead to criminal charges.
Some individuals have special considerations. For example, people who are going to get a large sum of money might need to find out how that will impact their case.
