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What Not To Do When Filing for Bankruptcy

Posted on June 21st, 2022

Bankruptcy Lawyer

Bankruptcy is a life-changing experience, but if you want to be a positive one, that is best to know what not to do before filing. Too many consumers make common mistakes while trying to file for bankruptcy that can easily cost them the entire case.

Bankruptcy courts don’t take too kindly to people who are trying to hide or give away their assets that should be a part of their filing. The penalties could end up being the dismissal of your petition and you could end up with criminal charges punishable by up to $500,000 in fines and five years of jail time.

Here are some of the common mistakes you should avoid before filing for bankruptcy.

Lying About Your Assets 

In a chapter 7 bankruptcy, there is a means test, which is a requirement, and it means you must disclose all your assets and income, which will determine the capacity to pay off creditors. If you choose to purposely leave out assets or income in the hopes that it will help your qualification, your case could easily be dismissed before you even start. You could also be banned from filing on those debts ever again if it is to be found out. Eventually, the bankruptcy trustee will have access to your financial records, so it is highly unlikely that your deception will go unnoticed. The bottom line issue should always tell the truth if you need to file for bankruptcy.

Not Consulting a Lawyer 

For the most part, bankruptcy is too complicated for the average consumer to fully understand. Bankruptcy lawyers will know all the laws which often escape uninformed people. An example of this would be if you have a child with a part-time job that is still living with you and is claimed as a dependent, their earnings must be counted towards household income. For many people, they may not know that. A lawyer will know these rules and be able to help you through this entire process.

Giving Assets To Family 

This is a major red flag. You can’t give away things like cash, property, cars, jewelry, electronics, or anything else that would be considered good stuff to friends or family. It’s dishonest and is a clear-cut way for you to lose everything. If you want to keep your valuable assets after filing for bankruptcy, then not only should you consult a lawyer, but you should also be open and honest about what you own or still making payments on. This way, all the information that is needed to file for bankruptcy is there and most likely, you will be able to keep your valuable assets in the long run.

We know filing for bankruptcy is scary, but it is why we suggest consulting a bankruptcy lawyer like our friends at The Law Offices of Ronald I. Chorches for more information. 


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