Bankruptcy Dos & Don'ts
It is imperative that you conduct yourself in an honest an forthright manner before and during your case. Here are some Dos & and Don'ts in handling your affairs.
The Dos
Do take bankruptcy seriously. Although it is a constitutional right, abuse is not tolerated by the courts.
Do be honest and forthright with your attorney. Losing faith in a client might result in your attorney dropping you as a client. Your attorney is here to help and support you, which is extremely difficult if you are not disclosing all of the necessary information to adequately represent your case.
Do be honest and forthright when filing out your bankruptcy petition. Disclosure of all assets and liabilities is required in bankruptcy. Don't turn your bankruptcy into a criminal matter. The punishment will likely be worse than the loss of assets you are trying to hide. Sacrificing a little privacy now will be worth it in the long run.
Do inform your attorney of everyone you owe money to no matter how trivial or embarrassing. This includes family members and friends.
Do close your checking and savings accounts at the bank where you hold a credit card or line of credit like an auto loan. This will avoid your account from being frozen and the funds seized by the bank if you stop paying on that debt. Instead, move your accounts to a bank that you don't have liabilities with.
Do continue making payments on your vehicle that you would like to keep. Creditors have the right to repossess your vehicle without notice to you if you miss a payment.
The Don'ts
Don't talk to your creditors directly after you have filed for bankruptcy. If you are working with an attorney, he or she is there to speak on your behalf. Always forward any correspondence immediately to your attorney from any creditor.
Don't make preferential payments to family or friends within one year before filing for bankruptcy. Any payment in excess of $600 within 90 days of filing is also considered preferential and may be recovered by the trustee and disbursed to your creditors. These payments will need to be disclosed.
Don't run up a lot of bills for luxury items or purchase large ticket items like a car right before you file for bankruptcy. This could cause the court to find your petition fraudulent and cause your case to be dismissed or those bills exempted from the bankruptcy putting you right back where you started. If you have doubts about any recent purchases, discuss them with your attorney.
Don't exclude a creditor from your petition for any reason. If you feel you must repay a particular debt, you can reaffirm the debt after the bankruptcy.
Don't pull funds out of your retirement plan to pay bills. Most retirement plans are 100% protected in bankruptcy. Aside from the early withdrawal penalties and income tax, the bills might be discharged in the bankruptcy and you might be able to keep the retirement funds through an exemption.
Don't transfer property into someone else’s name to hide it from the courts or your creditors. This is considered fraud and might lead to dissmissal of your case or the property can be seized by the trustee.
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