3 Important Things You Should Know Before Filing for Bankruptcy

Law Blog

Making the decision to file for bankruptcy might be a good idea if you are in a bad financial state. If this is something you are currently considering, you should talk to a bankruptcy attorney to learn more about the process. When you talk to the attorney, he or she may give you a list of things to do to prepare for this. Your attorney may also tell you several things you should not do. Here are a few things your attorney may suggest to you at your initial consultation.

Get Your Taxes Filed

You will not be able to file for bankruptcy if you do not have all your taxes filed with the IRS. If you have unfiled returns, you will need to get them filed as soon as possible. The information on your returns is needed to fill out the bankruptcy documents, and the trustee will also want to see your returns to determine if you typically owe money or will receive a refund after filing your taxes. If you typically receive a refund, the trustee will probably want to keep the next refund you receive after filing for bankruptcy.

Avoid Racking Up More Debt

It can look suspicious to the bankruptcy trustee when a person racks up a lot of debt just before filing for bankruptcy, especially if the debt is for luxury items. If you have to use your credit cards to survive before you file, make sure you limit your purchases to things you really need. This can include food, gas, and minor clothing purchases.

You should not take any cash advances from your credit cards before you file, because you will likely have to pay these back if you took them within 70 days of filing.

Avoid Getting Rid of Assets

The other thing your attorney may discuss with you involves the assets you own. For example, if you have recreational vehicles, such as an RV or four-wheeler, the trustee may have the right to seize these items from you, especially if you do not have loans on them. To avoid this, people will give these assets to a friend before filing; however, this is not legal.

The trustee will specifically ask you if you sold or gave away any assets within the last six months. If you did, it may come across as bankruptcy fraud, and you could get in trouble for this. In addition, the trustee will have the right to dismiss your case if you are caught doing this.

These are a few things your attorney will discuss with you before you file, but there are many other important topics you must talk about. To learn more, contact a bankruptcy attorney in your area, such as Hornthal Riley Ellis & Maland LLP.


11 February 2016

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