Bankruptcy: Do’s and Don’ts

bankruptcy form

You will be overwhelmed. You will feel out of sorts and confused regarding the situation you are in. Most of all, you will wish to examine every facet of your taking on a Bankruptcy filing.

After you list all your options and you finally decide that filing is the best alternative, you will need to know the details that work for and against you, to help better plan your case for your filing.

·       Do: Tell your Lawyer Everything

It will be humbling and embarrassing, but it is better if your attorney knows everything about your situation. Don’t tell your attorney that certain items of personal property do not belong to you if they really do belong to you. Anything that isn’t listed in your petition may not be discharged.

·       Do: Pay Your Basic Expenses

You need whatever cash you have for basic needs. You need to take care of your family. This means rent, food and utilities. Another good use of your money right now is to pay your lawyer. Once you’ve decided to file bankruptcy, you need legal help and that requires paying your attorney.

·       Do: Get Credit Counseling

There can be a long wait to get an appointment to see or talk to a counselor. You don’t want to be in the position of being ready to file and unable to do so because you haven’t taken care of this.

·       Do: Advise Creditors

If you have any lenders, banks or credit unions to which you owe money, let your creditors know that you are having problems. If your Attorney is paid on retainer, you should give the Creditor’s your Attorney’s contact data at that time.

·       Do: Keep paying things you intend to keep

You should continue making payments on all vehicles and real estate you wish to keep. Remember, you must keep these payments current, the property insured and sign a reaffirmation agreement in order to keep secured property.

·       Do: Be Cooperative

If you have filed for bankruptcy petition, it is illegal to lie in bankruptcy proceedings. You need to be cooperative in the process and most of all, honest with your dealings with the Attorney and the Trustee.

·       Do: Have Patience

You will need to understand that it takes approximately 2 to 5 weeks after meeting with your Attorney for your petition to be completed. This time may vary depending on the amount of documents needed and how quickly you return them.

·       Don’t: Hide Assets

There are some people who go too far with this and actually hide their assets. They’ll ask if they should take all the money out of their bank accounts before they file. The money is still their property and they have to list it on their petition. Lying on your bankruptcy petition is a Federal crime and the punishments include prison, fines and the likely event that your debts will not be discharged.

·       Don’t: Transfer Property or Money

One rule of thumb is for you to be aware that transferring title to property before declaring bankruptcy may not be an option. Don’t sell or transfer assets to your friends or relatives to hide them from creditors or the bankruptcy court. The Trustee will ask you about such transfers at the first meeting of creditors, and has the power to recover those assets. Please consult with your Attorney.

·       Don’t: Leave out income

People think that a second, part-time job does not count as income. All household income must be included. If you want to claim somebody as a dependent in your bankruptcy, you must include his income.

·       Don’t: Pay to the preferred creditors

Some consumers desire to pay certain creditors in full before filing for bankruptcy. The court doesn’t want you to play favorites and pay money to some creditors and not pay the rest. The Trustee can reach back ninety days to recover money paid to general creditors and spread it out more evenly to all of your creditors.

·       Don’t: Sell your property for less than what it’s worth

This will not reduce the amount you have to repay and you may end up stuck with the difference.

·       Don’t: Make Last Minute Purchases/Charges

When the creditor gets the notice that you filed, it takes a look at your account history. If it sees a bunch of charges right before filing, it will get suspicious.

·       Don’t: Talk to your creditors

If you have filed for bankruptcy then don’t talk to your creditors. You can tell them to talk to your attorney about your case and debts.

·       Don’t: Spread News

Avoid unnecessarily spreading the news that you have filed for bankruptcy.

·       Don’t: Save a Debit card

If you have a credit card with a balance for after your bankruptcy, the credit card company will likely close your account anyway, just after you make a payment. You can continue to use debit cards which withdraw directly from your bank account.

·       Don’t: Make deposits into your bank account

Do not deposit any money, which is not considered salary or payment to you, into your bank account.

Most importantly, make sure before you do anything, you confer with your Attorney for their expertise for your situation. There is no “cookie-cutter” mentality here—all BK’s are as different as the people filing.