Do’s and Don’ts Of Filing For Bankruptcy
Before anything else, it’s always best to consult an attorney as soon as you first start to consider the option of filing for bankruptcy. An experienced bankruptcy attorney will be able to help steer you in the right direction in terms of what to do, what not to do, and what to expect based on your specific financial situation.
Various financial decisions made as early as months before, as well as after, filing bankruptcy can have an impact on how easy or difficult your bankruptcy filing becomes. For this reason, make sure to acknowledge and fully understand the following DOs and DON’Ts as they relate to preparing to file for bankruptcy:
Don’t Transfer Money or Property
Whether innocently, or with intention of hiding assets/removing them from your bankruptcy filing, transferring money and property can be seen a fraud by the bankruptcy courts. It’s important to not make any changes to your current assets or finances before consulting a bankruptcy attorney.
Don’t Pay Creditors
Trying to “make good” on loans or outstanding payments in anticipation of bankruptcy is actually prohibited in bankruptcy. The bankruptcy court sees these payments as “preferential payments” as the repayment of debts is to be handled strictly by the bankruptcy court. The court may actually file lawsuits to get these payments back. From your first meeting with a bankruptcy attorney, always inquire as to what regular payments or outstanding invoices to pay before doing so.
Don’t Deposit Money Into Your Bank Account
Other than regular deposits for salary or other regular income sources, do not deposit funds into your personal bank account. The bankruptcy court will look into any unusual transactions made on accounts with your name on them which will slow down or hold up the process overall.
Don’t Prepare For “Expected” Future Payments
Any funds “owed” to you, or that you expect to be coming such as an inheritance, work bonus, or tax refund are the property of the bankruptcy estate and will be used to repay your creditors during a bankruptcy. Consult a bankruptcy attorney before committing to an “expected” future payment.
Do Prepare Your Financial Records
Income statements, tax returns, credit report, bank accounts, credit card and mortgage and loan statements/balances, and a list of assets and their value will all be helpful and/or necessary when moving through the bankruptcy process. Compiling these with the help of a bankruptcy attorney will help to ensure a smooth process without surprises or hold ups.
Do Be Honest With Your Attorney & Paperwork
Sometimes people feel embarrassment when faced with bankruptcy, and tend to hide, or not disclose all assets, debts, or loans when proceeding with the bankruptcy. It’s important to be up front about all debt and assets to ensure the bankruptcy goes as smoothly as possible.
Do Keep a Record of All Bank Account Transactions
Keeping a physical record of what each and every deposit and withdrawal was from or used for will be extremely helpful to the bankruptcy trustee that will inevitably review your bank statements. Hold on to significant receipts and make notes about each transaction as you make it.
Financial mistakes made during or before bankruptcy are often times unintentional, however may result in wasted time, money, and effort on all involved. Because each bankruptcy filing is different, it’s always best to consult an experienced bankruptcy attorney to discus your specific situation in detail in order to provide the best outcome for you.
If you have questions or would like to start discussing the possibility of filing bankruptcy, do not hesitate to contact our office to speak with our experienced bankruptcy attorneys. Our office can be reached at (702) 998-1188, info@ljlawlv.com, or by scheduling a consultation online.
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