Posted On May 21, 2018

5 Surefire Ways to Screw Up Your Bankruptcy

The bankruptcy process is fairly complex, and many mistakes can completely defeat an individual’s ability to file for bankruptcy protection. Those considering filing for bankruptcy need to understand these mistakes so they can avoid them. Here are five common mistakes that could completely destroy a person’s ability to file for bankruptcy.

Lies About Assets

Those facing bankruptcy may want to try to hide assets to avoid having them seized, but this is a serious mistake that could lead to dismissal of the bankruptcy petition, or worse. The bankruptcy trustee will get full access to the bankruptcy candidate’s financial records at some point in the process, so these deceptions will be noticed.

Giving Away Assets

In the days and months leading up to bankruptcy, debtors may find that they have assets they wish to protect. Giving those assets to friends or family is not a way to protect them. This can look like an attempt to defraud creditors or hide assets, which bankruptcy lawyers in Las Vegas will warn against because of the danger it creates.

Failing to Tell the Attorney Everything

Once a filer has an attorney, telling the attorney everything about the financial situation is critical. That is the only way the attorney can help. When an attorney does not know some of the facts surrounding a debtor’s financial situation or assets, mistakes can happen on the bankruptcy forms.

Touching Retirement Accounts Before Filing

Debtors that have a retirement account in place need to leave it alone in the weeks prior to bankruptcy. These accounts are typically exempt, and if money is pulled out in an attempt to repay creditors or fix a financial problem, the process can make that money available to be seized or change the debtor’s overall income profile. Retirement accounts need to be left alone until the bankruptcy process is over.

Adding Extensive Credit Card Debt

Bankruptcy trustees do not want to see huge amounts of debt added right before filing for bankruptcy. If a creditor feels that a debtor ran up a bunch of debt before filing, the creditor has the right to challenge the request to eliminate some of that debt. This could put the bankruptcy process at risk.