5 Precautions to Take before Filing for Bankruptcy
After you file for bankruptcy, the courts look at your income, your debts, and your assets to determine if you have the ability to pay what you owe. However, the courts look beyond just your current circumstances – they also look at the months leading up to your filing to make sure there is no evidence of impropriety. Bankruptcy is designed to help those who cannot pay their debt – it is not designed as a way to spend a lot of money and avoid responsibility.
Don’t Take on New Debt
You may putting all the money you have into paying your debts. If something else comes up, you may have to take out a new credit card or loan to pay for it. Or you may try to pay down some of your debt by taking out a loan and having just one payment.
The problem with these things is that the bankruptcy court might interpret any new debt as an attempt to commit bankruptcy fraud. It might think that you took out new debt with the intention of just filing for bankruptcy and not paying for the debt. Therefore, you should avoid taking out any new debt within 12 weeks of filing for bankruptcy.
Don’t Use Retirement Funds to Pay Expenses
Instead of taking out a loan or other credit, you may decide to take money out of your retirement account to pay off some debts or to pay for your living expenses. This might seem like a better alternative to taking out more debt, but it is really only creating another problem. You’ll be using money that you need to live later in life, and you’ll be paying more in taxes and penalties on top of that.
Leave your retirement money where it is and talk to a bankruptcy attorney near Gilbert. Filing for bankruptcy can put an end to your debt problems so that you have the money for your living expenses without draining your retirement account and creating more problems for yourself.
Don’t Move or Transfer Assets
You might be worried that filing for bankruptcy will mean that certain assets are seized, like your house, car, or savings. So, in order to protect them, you might move them out of your name or give them to someone else. The courts are likely to see these actions as an attempt to commit bankruptcy fraud.
If you are worried about how bankruptcy will affect your assets, talk to a bankruptcy attorney. Some assets are exempted from the bankruptcy, depending on their value. You can also protect assets by filing for Chapter 13 bankruptcy in Gilbert, which is a debt reorganization plan rather than a liquidation.
Pay Your Income Taxes
You must be current on your income taxes to be allowed to file for bankruptcy. You may owe back taxes, but you should have an approved plan with the IRS to pay it back. Filing for bankruptcy will not relieve you of your obligation to pay those taxes. You cannot discharge taxes in bankruptcy.
If you owe taxes and want to file for bankruptcy, talk to a Gilbert bankruptcy attorney about your options. Your attorney can help you work out a plan to get where you need to be to file for bankruptcy so that you can get debt relief and start rebuilding your finances.
Provide Accurate Information
You will be asked to provide a full accounting of your finances, including all your income, all your assets, and all your debts when you file for bankruptcy. You cannot leave anything out because you think that it’s not relevant to the bankruptcy case.
If any inaccuracies are found in your bankruptcy filing, you could be charged with fraud and you could face fines and penalties. Work closely with a bankruptcy attorney to put together your petition so that there are no mistakes or inaccuracies.
Filing for bankruptcy can provide you tremendous debt relief so that you can start rebuilding your life and gaining control of your finances. But if you make any of these mistakes, you can derail your filing and maybe even create more problems for yourself. Work with an experienced Gilbert bankruptcy attorney to put together a strong bankruptcy filing so that you can be free of your debt quickly.
Gilbert Bankruptcy Lawyers help both individuals and businesses get the maximum debt relief possible under bankruptcy law. We handle both Chapter 7 bankruptcy and Chapter 13 bankruptcy for individuals, as well as business bankruptcy options. Call us in Gilbert today to schedule a consultation with a bankruptcy lawyer and learn how bankruptcy can help you.