1. Provide Inaccurate, Incomplete or Dishonest Information
You are required to provide complete and accurate information about all of your assets, debts, income, expenses and financial history. You do so under penalty of perjury. If you knowingly misrepresent your information, such as fail to disclose an asset, you could be subject to criminal prosecution.
2. Rack Up New Debt
If you used a credit card to buy a luxury item within 90 days of filing bankruptcy, in an amount exceeding $600, than you may similarly be denied a discharge of that debt. Again, the creditor may file an objection to discharge of that debt, claiming you had no intention to repay it.
3. Move Assets
Don't be tempted to sell, transfer for safekeeping, or hide assets before filing bankruptcy. If you do, you might be denied a discharge and even be subject to criminal penalties.
4. Favor One Creditor Over Another
If you pay back loans to friends or relatives (within one year of filing), or even other creditors (within 90 days), then this may be considered a “preferential transfer.” The bankruptcy trustee may file an adversarial proceeding to get the money back from the person or entity you paid, and then disburse the money in equal shares across all of your creditors.
5. Fail to File Income Tax Returns
Tax returns are crucial to determining your current and past earnings and asset holdings, as well as satisfying potential priority tax claims.
6. Ignore Impending Collection Actions
Advise creditors right away of your intention to file bankruptcy. Your attorney may be able to stop attempts to take your property. Without filing there is no protection from creditors.
7. File When You are About to Receive Substantial Assets
You should reconsider filing bankruptcy if you are about to receive an inheritance (within one year), a significant income tax refund, a settlement from a lawsuit, or repayment from a loan you made to someone else.
In summary, filing for bankruptcy is a complex matter that should not be taken lightly. An attorney can help you to avoid these common mistakes and ultimately help you to get a fresh start. Call Bankruptcy Solo, LLC at 636-493-1700 or visit www.bankruptcysolo.com to discuss these and other complex legal matters at your free consultation.