Filing for bankruptcy is often the last resort for individuals who just can't handle their debt anymore. If you think you might fit into this category and are thinking about officially filing in bankruptcy court, you'll want to plan your next moves carefully. Financial decisions you make in the last few months before officially filing could actually have an effect on your bankruptcy case itself. Here are three things you do not want to do if you are certain you are going to file for bankruptcy in the near future.
Don't Give Away Your Assets
A common myth surrounding bankruptcy is that if an asset is not in your name, your creditors can't go after it. But when you file for bankruptcy, you are often required to disclose all assets including any that you gave away within the last few years. The exact amount of time will vary by state but in general, if you try to dump your assets by gifting them to a relative right before filing, the court is not going to be happy about this and it could end up costing you.
Don't Give In To Creditors At The Last Minute
If a creditor of yours gets wind of the fact that you are about to file for bankruptcy, they may become more aggressive about making phone calls or even show up at your door to try and collect. But once you've made the decision to file, you need to stop all payments and let the court handle everything from here on out. Continuing to pay a debt at this point won't help your case and does not guarantee you will still have a credit line after the bankruptcy is over. If a creditor is making specific threats, let your bankruptcy lawyer handle it for you.
Don't Take Money Out of Retirement
If you've been especially desperate recently, you may have been taking some cash out of your 401K or other retirement assets. You'll want to stop this immediately if filing for bankruptcy because retirement funds are generally not touchable by creditors in a bankruptcy. But once the money is out of your retirement fund and in your bank account, it will count as an asset that you need to report to the court.
It's understandable that you would to try and preserve as many assets as possible when you are considering bankruptcy. But it's important not to do anything drastic like trying to put your assets under a relative's name immediately before you file. If in doubt, the best solution would be to hire a bankruptcy lawyer and let him or her walk you through the process instead of trying to go it alone. Reach out to a bankruptcy attorney like Collins Toner & Rusen for more information.
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