Bankruptcy can be a complicated process, so you certainly want to avoid doing anything that can make it even harder to get a fresh financial start. A Montgomery County Chapter 13 bankruptcy lawyer can tell you what you should do before filing, but perhaps more importantly they can help you avoid mistakes that could extend this process or jeopardize your chances of wiping your slate clean.
Why Should I Avoid Taking Out More Debt?
One mistake you should avoid is taking out more debt. Some filers think that they might as well max out their cards or take another loan if they’re just going to final for bankruptcy anyway. This is a terrible idea.
When you charge up a bunch of extra debt and then file for bankruptcy, your creditors are probably going to accuse you of fraud. They can say that you clearly had no intention to pay off this debt when you took it on. That can derail your entire bankruptcy process.
Why Should I Avoid Paying Specific Debts Before Filing?
At the same time, you should avoid paying off any specific debts before you file. We know that this may sound odd, but the issue here is “preferential payments.” If you pay off a debt and then file for bankruptcy, your creditors are going to see that. Then they are going to argue that it’s unfair that one creditor got money and they didn’t.
The bankruptcy trustee can then ask that creditor for money back. The assets can then be distributed evenly among all of your creditors. You are better off just avoiding this added hassle.
Why Avoid Using Retirement Funds to Pay Off Debts?
You should also avoid using retirement funds to pay off debts. If you are thinking of filing for bankruptcy anyway, this could end up being a waste because retirement accounts are often protected during this process! You may be able to come through this process with those assets intact, so do not waste them.
Why Is Hiding Assets or Debts a Bad Idea?
It’s also a terrible idea to hide assets or debts. Some filers think that they can get one over on the bankruptcy court by taking their name off of an asset or transferring it to someone else. That will be found out and it could make it harder to discharge your debts.
Do I Need a Bankruptcy Lawyer?
Filing for bankruptcy isn’t easy. There’s a lot of paperwork to do and mistakes can cost you. That’s why we recommend hiring an attorney. Someone from our firm can help you determine if this is your best option, and then we can guide you through your Chapter 7 or Chapter 13 bankruptcy.
Talk to an Attorney
If you want to learn more about how bankruptcy works and what you should avoid doing before you file, contact Mudrick & Zucker. We can schedule a consultation and help you get this process started.
