Bankruptcy is a legal proceeding, governed by the U.S. Bankruptcy Court, designed to offer you a clean financial slate to build on. When preparing to file for bankruptcy it is important to follow some guidelines so your future bankruptcy case is not at risk of being rejected or extended.
Don't Charge up Debt
Charging up debt six months before bankruptcy is a big no-no. Creditors can challenge recent charges, and the bankruptcy court can order you to pay charges that aren't deemed to have been necessary. Charges over $600 will raise the trustee's suspicion and open you up to a lot of questions. You may be asked to provide receipts proving the necessity of the charges. If you charge up debt knowing you will file bankruptcy, you can also be charged with fraud. Simply put--do not charge any items to your credit cards if you know bankruptcy is imminent unless it is a necessity.
Don't Transfer Property or Assets
The bankruptcy process requires you to answer questions honestly and completely. Your property and other assets are used to determine if you can file bankruptcy and what type of bankruptcy you qualify for. Transferring property out of your name to avoid having it listed as an asset is considered fraud. The bankruptcy process requires you to list any property or assets you have sold or transferred within the previous two years.
Don't Lie
Lying during bankruptcy is a serious legal issue and should be avoided.
It is imperative to avoid lying to your attorney or on your bankruptcy petition. The trustee assigned to your case has legal avenues to find the information you may have hidden or refused to disclose. This can land you serious legal issues.
Do Learn from the Past Mistakes
Spend time reflecting on the issues that caused your financial difficulties. Failure to face what happened can find you in the same spot in the future. Even if you did not spend frivolously and had an illness or unavoidable situation, consider if you could have been more prepared had you saved additional money in previous years. There isn't any point in feeling like a loser or failure--things happen. Learn from the past and work to rebuild a solid financial future.
To Create a Budget
A budget can help you save money each month.
Bankruptcy is going to help provide you with a clean financial slate. Take the time to prepare a budget you and your family can live with. List all the areas you spend money on and decide on the maximum amount you can spend in this category per month. Common categories are savings, rent, food, auto expenses, entertainment, kids expenses, clothing, medical and pet care. Commit to staying within your budget.
Do Keep Paying on Your Car and House
Bankruptcy allows you to reaffirm your debt for your car and house under certain circumstances. It is important to stay current on the loans to ensure the best chance at being able to reaffirm the loans. Reaffirming the loans means the loans are exempt from bankruptcy and you can keep the house or vehicle and continue making payments.
Source: http://www.ehow.com/info_7743133_dos-donts-before-bankruptcy.html#ixzz2eoBFeVlN
Note from HandelontheLaw.com: This article is to be used as an educational guide only and should not be interpreted as a legal consultation. Readers of this article are advised to seek an attorney if a legal consultation is needed. Laws may vary by state and are subject to change, thus the accuracy of this information can not be guaranteed. Readers act on this information solely at their own risk. Neither the author, handelonthelaw.com, nor any of its affiliates shall have any liability stemming from this article.
