What not to do when filing bankruptcy?
Failure to disclose assets
What happens if you do not disclose all of your assets when you file for bankruptcy?
This is one of the most common bankruptcy mistakes people make when filing bankruptcy. You must make a complete listing of all your assets. The trustees can object to bankruptcy if they find assets, exempt or not, have not been listed.
In the present situation or in a subsequent bankruptcy, if you do not properly report your properties and recent asset transfers, you may not be entitled to a discharge of those debts and you will therefore be liable to criminal penalties.
If you forget to reveal all of your debts, or purposely hide them. It will only cause further complications. Your bankruptcy trustee might interpret it as an attempt to commit fraud.
What are some common bankruptcy mistakes?
Waiting until the last minute
Some people wait until they get a garnishment notice from their employer. You should take action when you get sued, not when you get garnished by a creditor.
Failure to disclose all your creditors
You cannot pick and choose notice to creditors. All creditors must be listed. A non – listed creditor is not wiped out in a bankruptcy proceeding.
Failing to provide documents
You will be required to produce bank account statements, tax returns brokerage account IRAS and 401K accounts as well as your house cars and personal possession.
Filing when you have a large tax refund coming.
Only a $1000 per working person is allowed for an exemption in the tax refunds. The trustee will get the rest. This is extremely important in timing the filing. The first part of the year the trustee will always ask for the tax return and information about the refund. If you have a large refund coming, it is best to wait to file.
Spending before filing
Generally, any non-essential spending 90 days or less before filing is a bad idea. Cash advances ,payday loans and luxury spending are all problems in a bankruptcy.
Do not pay relatives back within 90 days of filing.. If you do, they will have to give the money to the trustee.
Not attending your 341 hearing.
This is grounds for dismissal of the bankruptcy.
Tell your attorney everything. In 40 years, I have had two debtors get into trouble for not disclosing. If it is substantial non-disclosure, the US Attorney can bring criminal charges against a debtor. The Bankruptcy filing gets thrown out as well.
Filing without preplanning the bankruptcy
Many of these problems can be avoided if you consult an attorney first. Most people know when it is time to file. That is when you see the attorney.
Filing with the wrong chapter
When they file, most people use Chapter 7 bankruptcy or Chapter 13 bankruptcy. There are important distinctions between the two, however. Chapter 13 is best if you’re trying to save your house from foreclosure, for instance. When you have no savings or a low income, Chapter 7 is easier. Choosing the wrong one may lead to the loss of property that you would have been able to save or not discharge unique debts. You may also be unable to apply to file for one or the other.
What Cannot be discharged in bankruptcy?
If you make the common bankruptcy mistakes such as not listing all of your debts. Debts you failed to mention in your bankruptcy filing will not be discharged. Besides that alimony and child support. Some outstanding taxes, Debt for death or personal injury arising from the service of a motor vehicle by the debtor when poisoned by alcohol or other substances, etc. These debts cannot be discharged.