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5 Things Not To Do Before Filing for Bankruptcy


Perhaps “Real Housewives of New Jersey” starlet Teresa Giudice should have done some research prior to committing bankruptcy fraud and then pleading guilty to such in March. It was just one of four different types of fraud that she and her husband committed. For her various indiscretions, the reality star received a tough jail sentence on October 2nd.

Generally speaking, any type of behavior that will cast doubt on your bankruptcy must be avoided. Remember that bankruptcy involves federal court, and any attempt to trick the court into believing you cannot pay back your debts can lead to a dismissal of your bankruptcy petition, as well as your being charged with various crimes. Here are five things that you should never do before filing for bankruptcy.

Hide or Lie About Assets or Debts

This type of behavior can cause you many problems as such actions may lead to fraud charges. Hiding assets may include transferring them to family members, converting such to cash, or falsely devaluing property. The term “lying” should be self-explanatory, but some people don’t seem to understand that when you are asked to list all assets on your bankruptcy worksheet that deciding not to put everything down is, in essence, lying.

Also, all debt must be reported. Hiding certain debts, such as personal loans by family members, will raise questions about your petition. Be accurate, honest, and complete about your assets and debts.

Pay Back Loans Selectively

People who decide to pay back relatives, friends, or others just prior to filing will raise a big red flag. This action calls into question whether or not the filer is attempting to transfer cash to another person for the sake of keeping it out of the hands of their other creditors, and if, after being granted the bankruptcy, they might manage to get that cash back. Plus, if you do pay such a loan back, the court will make the person who made the loan file paperwork regarding the money, and the court may sue them to recover the fund in order to pay back creditors.

Max Out Credit Cards on Luxury Items

It’s important to realize that bankruptcy can be denied to someone who has acted in a cavalier and irresponsible manner just prior to filing. If you’ve abused what remaining credit you had left, the court can determine that the debt will not be discharged. Maxing our credit cards, purchasing luxury items, or putting a vacation on your card are all behaviors that can lead to the debt being discharged.

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The best thing to do is stop all use of credit cards at a minimum of 90 days prior to the bankruptcy filing. Within 90 days of your filing, every purchase you make can be examined. If the court believes you’ve been abusive in in purchasing an item, it may deny the discharge of that debt.

Stop Paying Your Mortgage

If you stop paying your mortgage and your property is taken, you will not be able to get it back after you file for bankruptcy. Before your property is seized seek legal protection in order to retain possession. Once the automatic stay has been out into effect by the filing of your bankruptcy case, you’ll have time to try to get your mortgage in order.

Fail to File Tax Returns

Not filing tax returns will complicate your bankruptcy filing greatly. You’ll need at least the last two years of returns filed prior to filing your case. If you don’t have your tax returns, then it’s likely that your bankruptcy case will be dismissed, and you will not be able to pursue bankruptcy until you have submitted those returns to the IRS.

Serious Business

It’s important to remember that bankruptcy is serious business and any attempt to abuse the system or defraud others can have serious consequences. When filing you must be accurate, forthright, and honest, act responsibility, and be careful to not raise doubts as to your veracity.

Contact Us If You Are Filing for Bankruptcy

If you are considering or are about to file for bankruptcy, it’s important to utilize an bankruptcy attorney with the experience, expertise and knowledge that will ensure everything is done properly. Contact a bankruptcy attorney in West Palm Beach, Florida from The Law Office of Kelley Kaplan & Eller at 561-264-6850. We can help you attain the best possible outcome during a challenging time.

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