Crucial Things You Need to Know When Considering Bankruptcy
Filing bankruptcy is stressful, and you always want everything to go as easily and smoothly as possible.
This means that, before you file bankruptcy, you need to do your research to learn all of the facts and look at your financial situation from every angle. While you are going through bankruptcy, you want to be sure you handle your finances properly.
If you aren’t careful and make a mistake with your finances during the process of bankruptcy, there could be serious consequences. You can handle it though. Just make sure you are smart and remember these six facts and tips.
You Will Likely Still Have to Pay off Student Loans
Although it can relieve a lot of debt, filing bankruptcy will not actually make your student loans disappear. A lot of people believe that bankruptcy erases all debt, but barring special circumstances, your loans probably won’t be discharged.
Do Not Obtain New Debt
If you will be filing bankruptcy, you should not take out debt or a new line of credit 70-90 days prior to filing. This is because if you know you will be filing bankruptcy, then you believe this debt will be erased.
This means that you took out a new line of credit or new debt without any intention of paying it back. This is not only immoral, but it can actually cause your bankruptcy to be denied by the creditor.
Do Not Repay Creditors
Most banks suggest that you do not pay back any loans within the 90 day period before you file bankruptcy. This could qualify you for a preferential transfer, which can in turn be used to get some money back from loans that have already been paid off.
After you debts are discharged, creditors are legally prevented from trying to collect on your debts.
Do Not Transfer Money
Do not try to transfer any money out of your account. This could make it seem as if you are trying to hide money. You cannot try to hide money or assets in any way. Even if it you have no ill intention, do not do it because it will look like an attempt to keep some type of monetary asset.
When you file bankruptcy, you must provide details about all of the assets you still have. You do not want it to seem as if you are trying to hide your money. If it seems you are trying to hide assets or are lying, your bankruptcy could be denied, and you could face criminal charges.
Do Not Cash Out Savings
If you are going through bankruptcy, it is not a good idea to try to cash out any savings. You must notify the trustee over the bankruptcy about all of your money and assets, so attempting to cash out your savings can be seen as a way to hide money.
If you are caught doing this, your bankruptcy could be denied, and you could face criminal charges. This is illegal and is a textbook definition of theft, so instead of trying to lie, spend your efforts coming up with a plan to improve your credit and save even more after the bankruptcy is complete.
Do Not Try to Hide Assets
Just like you do not want to transfer money or cash out savings, especially to hide it, you definitely do not want to try to hide any of your remaining assets. More valuable assets are included as part of the bankruptcy process.
Even some things you wouldn’t think of— everything from household good to cash from worker’s compensation settlements is vulnerable.
Do Not Delay the Process
If a professional has told you that you should file bankruptcy, make sure you take time to discuss the timeframe with them so that you can understand when you should take action.
There are times that moving too slowly can have negative consequences on a bankruptcy, so use any resource you have on hand to make sure this doesn’t happen to you.
Educate Yourself and Stay Engaged
Bankruptcy is a difficult process to go through no matter who you are. The best bet you have at being financially successful in a short time frame after bankruptcy is to just educate yourself about the subject as much as possible.
Being educated and using your resources will help you make the best decisions possible. Before making any moves and take action, you want to be sure you understand all of the laws around bankruptcy and what debt it actually affects.
Filing for bankruptcy will never be fun, but if it is the best option for you, follow these tips and continue to learn as much as you can about bankruptcy to make the process as painless as possible.
