Do’s And Don’ts Before Filing For Bankruptcy

Sun 12 March 2017

After having a look at your financial situation, and having tried all other alternatives, you have come to conclude that filing for bankruptcy is the only option left. It is a scary situation, but not everything lost it is important to understand that there are chances of survival even in this mess. Bankruptcy laws have altered over the last few years; it has its benefits as well as drawbacks. Click Here to read more on bankruptcy laws, blogs.findlaw.com also gives insight into these laws. The most crucial thing to know is that filing for bankruptcy is not the end, and that it's a process and what you do after, before and during this period will have a bearing on your future financial situation. Do’s Reveal all your income and assets Before filing for bankruptcy check the income you derive from all your sources, be it from salary of house rent etc. Also list down and disclose your assets and expenses. By not disclosing your assets and income you may lose the right to debt discharge and be liable for criminal charges against you. It is the bankruptcy filer’s duty to reveal all the revenue and expenditure and be honest about it. Check your monthly expenses Review all your bank accounts and the amount of money you have as savings in each of these accounts. Look at your bank statements to know about the income and expenditure of every month. By doing this exercise, you will be able to figure out if you have any income which can be made available to the creditors File your income tax In order to file for bankruptcy you will have to show proof of your tax filing for the previous year or the current year. Failure in filing tax is liable to cancellation of bankruptcy petition. If self-employed document income If you are self-employed or on any benefits provided by the government, document and keep handy all your income and expenses for the past 6 months before filing for bankruptcy. This exercise is to check if you have any disposable income that can be handed to the creditor. Save your pay slip With news laws passed for prevention of abuse of Bankruptcy, it is important to have your pay slips or statements or any proof of your income to be submitted during filing of bankruptcy Don’ts Do not use your Credit Card By taking a loan or a cash advance just before filing bankruptcy, it can land you in deep trouble. Credit card companies can book you for fraud if you take an advance three weeks before filing bankruptcy. The other complication is the usage of credit card close to the filing for bankruptcy. If you have stopped making payments to your creditors, do not use credit cards. Do not transfer money to any friends or family Transferring your car, property or any one your assets to friends or family members before filing for bankruptcy is not allowed. If not disclosed, the bankruptcy case becomes weak due to this act. Transferring assets and attempting to hide property will become problematic in the future for you and also affect your right to discharge all your eligible debts. Do not borrow money from friends or withdraw money from Retirement Account Bankruptcy laws exempt assets like retirement funds. Many do not know this fact and withdraw money partially or fully from retirement accounts and try to pay their debts. As you can file for bankruptcy and still have your retirement amount intact, make an informed decision on choosing whether to withdraw money from retirement account or not.

 

By Oliver, Category: misc

Tags: Bankruptcy /