If you cannot make your monthly payments owing to overwhelming debt, filing for bankruptcy may be your best option. Despite appearances, though, the procedure is not easy. In order to maximise your chances of being discharged, you need to take certain actions and avoid others.
The Proper Way to File for Bankruptcy
Filing for bankruptcy requires careful consideration of several factors. The following are the top priorities:
- Consult a lawyer: many well-meaning individuals may offer assistance with your bankruptcy file, but they may lack the requisite legal knowledge to do so. If you want good guidance before filing for bankruptcy, a Chapter 11 business bankruptcy attorney is the person to talk to.
- Be ready for your attorney consultation by: Your lawyer will need detailed details about your income, expenses, debt, savings, and more. Take this documentation along with your federal income tax return to your attorney consultation.
- Keep your word throughout: A debtor filing for bankruptcy must affirm that all of the data included in the petition is true and correct. If you are dishonest with the bankruptcy trustee or the court, you may not get your debts erased, and you may even face criminal charges.
Filing for Bankruptcy: No- No’s
There are several things you absolutely must not do before or during a bankruptcy petition. Some examples are:
- Do not incur any further debt; doing so may give the impression to the court that you incurred the debt recklessly, thinking you would not have to pay it back. A court could rule that you are still liable for the debt, or they could reject your bankruptcy application altogether.
- Never try to conceal your assets; once again, your integrity depends on your being forthright about all you own and owe. The court will likely view any attempt to conceal assets as fraudulent, severely undermining your case.
- Never try to raise your income: Although it would make sense to pay off your debt by taking on additional employment or working longer hours, doing so could hurt your bankruptcy case. You might not be able to file for Chapter 7 bankruptcy, and if you do, you might pay more in the long run.
- Avoid taking out loans to pay off credit card balances; doing so could lead to unwanted tax penalties and the loss of either your retirement savings or your home equity.