When most people think of filing for bankruptcy, they think of what they need to do and have to do. Rarely do they worry about what they shouldn’t do. This is one good reason to consult a bankruptcy attorney when first considering the idea of filing for bankruptcy. The bankruptcy attorney will be able to fill the individual in on some tips they might like to consider before filing.
Prior to filing, most people don’t realize how the bankruptcy estate is created and what is included in it. Because of this many people will take money out of their retirement to cover their living expenses prior to the bankruptcy filing. This is a huge mistake because money that would be protected by bankruptcy exemptions is now part of the state and fair game for the trustee to take it. If it was just left in that 401(k) account it couldn’t be touched.
Another foolish thing individuals do is pay debts preferentially. They might choose credit cards that they want to continue using up until the bankruptcy filing so they choose to pay them while no longer paying any of their other debts. Preferential payment is not okay with the bankruptcy court and that money might be collected by the bankruptcy trustee. Even worse than that, people will pay friends and relatives back so they can leave them out of the bankruptcy filing. What they don’t know is the bankruptcy trustee will look through the bank account of the individual filing and see if there were any payments made in the six months prior to filing. Any money given to the relative or friend can be seized by the bankruptcy court making a very embarrassing situation for the individual.
The bottom line is, if someone is to be successful when filing for bankruptcy is important that they are completely truthful with the bankruptcy court. Now that we are living in a technology driven and age, it has become very easy for the bankruptcy trustee to gather a wealth of information about a person that is filing bankruptcy. Many people make the mistake of bragging on their social media website about plans they are making post bankruptcy. It won’t look good for an individual to post something about an extravagant cruise or an expensive trip to Hawaii after they get their bankruptcy discharge. This will lead to a lot of questions from the bankruptcy trustee. Along those lines, always remember that a former friend or disgruntled employee might also try and enlighten the court on any property that the individual might be trying to hide. That’s why it’s important to let the bankruptcy attorney earn their keep by using the exemption laws provided.