Filing for bankruptcy isn't as easy as most people think. There are certain laws and regulations to follow, and one shouldn't make any accidental or innocent errors that may hurt their bankruptcy case further.
One of the best solutions you can consider when filing for liquidation is getting a bankruptcy lawyer. These pros understand the ins and outs of bankruptcy law and will ensure the process is handled smoothly, regardless of the circumstances.
Your bankruptcy lawyer will not expect you to make certain mistakes while they handle your case. This piece will share some of these common blunders, so avoid them if you want to navigate the bankruptcy process successfully.
Disclosing a Few Assets or Income Sources
Chapter 7 bankruptcy, for instance, has a 'means test' that requires you to disclose all your sources of income and assets. This helps determine your capability to pay off your creditors. Some people may choose to lie about the assets or income sources to increase the chances of qualifying, but this can get the bankruptcy case dismissed easily.
Since the bankruptcy trustee will check your financial records, the chances are high that they will notice your deception. You aren't supposed to hide some creditors, too, because these companies have a centralized information center and will know when you file for bankruptcy protection. The best thing to do is to tell the truth.
Transferring Some Assets Before Filing for Bankruptcy
Another trick people use when they want to cheat is to transfer their assets or funds to their relatives or close friends. For instance, they think that sharing money to their relative's accounts or changing the property to their spouse's name will offer protection, but this usually doesn't work.
The bankruptcy court always conducts a thorough investigation. If they notice that some assets were transferred, they will say you have committed bankruptcy fraud, even if you did so innocently or didn't plan to conceal the assets. So leave your assets and accounts as they are to avoid complicating the case.
Draining the Retirement Account
It's possible to protect most of your retirement benefits in bankruptcy. However, most people don't know this, and that's why they use the funds to pay off their debts before filing for bankruptcy. This financial mistake will cost you a lot in the long run since these funds can be protected when you declare yourself bankrupt. A good rule of thumb is to discuss with your bankruptcy lawyer before paying off your debts in this manner.
For more tips, contact a bankruptcy attorney near you.