What to Avoid if You Want Your Bankruptcy Filing to Be Successful

Debt Collection Lawyer

Admitting to yourself that it is time for a drastic financial change can be a scary thing to accept. Whether we like it or not, money is something that every person needs in order to have a roof over their head, food on the table, health insurance, and more. A person who has gone through a long period of time unable to find employment or struggles to pay off thousands of dollars in debt, may consider bankruptcy as an option to start fresh.

An attorney can help ensure that all clients understand what it means to file for bankruptcy, and how it can impact their future for many years to come. While we certainly advise clients about what to do when filing for bankruptcy, it is equally as crucial to be aware of what to avoid if they want their bankruptcy application to be successful:

#1 Don’t Lie on the Bankruptcy Paperwork

As your personal finances are undergoing scrutiny, now is not the time to fib or stretch the truth on your bankruptcy paperwork. People who are suffering from particularly desperate times, may be tempted to hide assets or under-report their annual earnings. If the government finds out you intentionally withheld information, there may be steep consequences to face. You may be discharged from a bankruptcy status, in addition to paying fines and serving time behind bars.

#2 Don’t Drain Retirement Accounts

If you are approved to operate under a bankruptcy chapter, your retirement funds may be protected. Therefore, it can be a gut-wrenching mistake to withdraw money from retirement funds to help pay off debts, when these same debts would have been eliminated after filing. If you spend the retirement money on debts, then you may not have funds left over to enjoy your senior years. This may then only cause an entirely new set of financial problems. An attorney is likely to suggest holding off on using money in retirement accounts until you find out more about which debts bankruptcy could eradicate.

#3 Don’t Acquire New Debts

In preparation for bankruptcy, do not go out and spend money that only results in acquiring more debts. If you have a sudden increase in spending a few months prior to filing for bankruptcy, a creditor may object to your debt discharges by stating that you used a loan without intentions to pay it back later (otherwise referred to as “presumptive fraud”). The only exception may be if you used the loans for necessities of living, such as clothing, food, rent, and utilities.

Filing for bankruptcy can be intimidating, and many people who really need to utilize this resource may be afraid to take that final leap. An attorney can provide the information you need to feel more confident about your decision. Do not let the tension and worry continue to build, please let us help you figure out whether bankruptcy is right for you.

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