The Do’s and Don’ts of Filing for Bankruptcy

Facing bankruptcy is never easy, but you can take steps (and avoid others) to make the legal process less overwhelming. In fact, what you do immediately before filing can be just as important as how you navigate legal proceedings. If you want to take the first step toward a debt-free future, follow these guidelines.

Bankruptcy “Do’s”

• DO Take a step back and relax. Any financial hardship is stressful, and filing for bankruptcy can be scary. Before you start the bankruptcy process, focus on the positive aspects of filing, such as no longer being afraid to pick up the phone and talk to debt collectors. Even if you’ve heard about bad experiences with bankruptcy from other people, these situations don’t have to apply to your unique situation.

• DO Disclose all assets and debts. The key to a successful bankruptcy is to be as honest and transparent about your debts and assets. Make sure your lawyer understands every facet of your financial circumstances. Do not conceal any information from your attorney, even if it seems embarrassing.

• DO Keep track of all paperwork. If your lawyer needs financial documents, make sure you provide them. The sooner you can yield the information your legal counsel needs, the faster you can move toward a secure financial future. Additionally, only provide information that is 100% accurate, to the extent of your knowledge.

• DO File your taxes. Make sure you are current with your tax filings prior to filing for bankruptcy, as the court will require your recent tax records in order to be compliant with bankruptcy laws.

Bankruptcy “Don’ts”

A simple mistake during the bankruptcy process can affect your case and your life for many years. Here are a few things to avoid before you file:

• DON’T Gift or transfer money: Under no circumstances should you be loaning or giving money to your friends or family members. This can be seen as fraud because the trustee may think you are trying to hide assets. 

• DON’T Go on a spending spree. Incurring additional debt on credit cards or borrowing money can also be a red flag for the trustee. Creditors can object to these large purchases and you may end up having your case dismissed or be required to pay these debts back.

• DON’T Conceal assets: Failing to mention certain assets or valuable property is often a surefire way to have your bankruptcy cases denied. You may even potentially face criminal charges for such conduct.  

• DON’T File your case yourself. While you don’t necessarily need a bankruptcy attorney to file, doing a DIY bankruptcy can cause more problems for yourself. Hire a trusted bankruptcy attorney to handle all the paperwork and to help ensure your case is accurate and compliant with the laws.

If you’re looking for legal guidance during the bankruptcy process, speak with a Southern California bankruptcy lawyer from Wadhwani & Shanfeld today.