How to Avoid Bankruptcy Mistakes

Bankruptcy is something which everyone tends to avoid, but there are times that it can come when you least expect it. And since can be a stressful period in your life, you are bound to make certain mistakes before you file for bankruptcy. The actions you take or don’t take may determine whether your bankruptcy claim will be successful or not. Hence, it’s important to avoid making mistakes when filing for bankruptcy and ensure your bankruptcy lawyer doesn’t do the same.

If the process and procedures are not followed properly, the trustee may you for more information; such as additional financial records, mortgage documents or court files. Sometimes, they may even ask for documents from many years ago, ending up delaying the discharge and costing you more money in lawyer fees and there is always the possibility of not getting the discharge, so it is vital that all formalities and paperwork are managed properly and in a timely manner.

Here is how you can prevent making some of these important mistakes.

Always Provide Complete, Sufficient, and Honest Information

It is extremely crucial during the meeting of creditors that you be completely honest and provide the required information about any assets, expenses, incomes, etc. you currently possess. If you knowingly fail to disclose an asset or income, you may be charged under criminal prosecution.

When filing your paperwork, never leave out any questions, lines or boxes, unless it really doesn’t apply to you. You have to fill out every section; failure to do so may incur extra charges to make amends to the paperwork.

Always File Your Tax Returns

Filing income tax returns is crucial to moving ahead with your bankruptcy case. If you do not file your tax returns before filing for bankruptcy, the IRS cannot make any tax assessments to determine your past and present earnings. Therefore, your case will most likely be rejected by the court.

Don’t Collect New Debt

That’s quite self-explanatory; don’t collect any new forms of debt about 70 to 90 days before filing for bankruptcy. If you do, your case might be denied. This is because your creditors will object to the discharge of your debt on grounds of fraud. In other words, they will simply state that you had no intention of paying the debt back.

Avoid Moving any Assets

When providing information about your previous or potential assets, don’t try to hide, sell or transfer any of your assets for safekeeping. If you do, you might be subject to a criminal penalty.

On the other hand, it’s alright if you have sold your asset in an effort to repay the debt on your own. But you will be required to impart this knowledge during the meeting of your creditors and on the financial affairs statement.