For people who have a significant amount of debt, filing bankruptcy is often a wise idea. The bankruptcy process not only lets a person eliminate debt, but in many cases a person is also able to obtain manageable payments and begin planning for a better future. Many people discover that a seasoned bankruptcy attorney is able to help them overcome their financial hardships and determine their available legal options. There are some important things, however, that a person should avoid while declaring bankruptcy.
Avoid the Accumulation of New Debt
Many people feel the temptation to obtain a new credit card or even personal loan during difficult financial times. There is a risk, however, that creditors might view any financial agreements entered shortly before bankruptcy as a sign that the individual did not intend to repay the amount. In some cases, a person might even be charged with fraud. As a result, individuals should avoid obtaining any type of new debt during this time.
Avoid Moving or Transferring Assets
As part of the bankruptcy process, a person must list all of his or her assets, which includes any assets that were recently disposed. Some people who recently sold or transferred assets are at risk of being accused of fraud or trying to hide assets.
Avoid Debt Repayment in a Selective Manner
It is a wise idea to make sure that certain debts are paid before engaging in the bankruptcy process. In many cases, however, “preferential payment” or deciding to pay one amount and not another is not preferred by courts. Instead, individuals are expected to follow a certain process when repaying debts.
Avoid Providing Courts with Inaccurate Information
A person will be required to provide a bankruptcy court with a significant amount of information. This process can feel invasive, but it is important that a person avoids disclosing any inaccurate personal information. A person who provides inaccurate information can end up facing criminal and civil penalties.
Avoid the Use of Retirement Funds
The use of retirement funds shortly after filing bankruptcy can significantly impact a person’s future. In some cases, withdrawing any amount from a retirement fund prior to retirement age can result in a person facing serious tax penalties.Instead, it is a better idea to avoid using a retirement fund during the bankruptcy process.
Do Not Avoid Filing Bankruptcy
Many people are hesitant to file for bankruptcy, which often means that they avoid doing so until their financial situation is overwhelming. It is a much better idea for any person who is interested in the bankruptcy process to immediately speak with a knowledgeable attorney.
Do Not Avoid Paying Income Taxes
Some people who owe past due taxes or feel that they cannot afford income taxes decide to avoid filing altogether with the Internal Revenue Service. A person, however, must report their tax debts to a court of law when filing bankruptcy. In some cases, people who have not filed taxes or failed to pay due taxes might be unable to discharge a debt.
Contact a Seasoned Bankruptcy Attorney Today
If you are debating the bankruptcy process, contact a knowledgeable attorney like Jim A Lyon who understands just how complicated this cycle can be and can make sure that case resolves in the most positive manner. Contact our law office today for assistance.