By Ryan C. Wood

In addition to the previous article, How to Avoid Fraud Charges in Bankruptcy, there are certain things that you should not do prior to filing for bankruptcy, as it may inconvenience you, or hinder or delay your case.

Banking

When it comes to banking, most consumers are loyal to their banks.  The most common phrase I hear is, “But I’ve been banking with “X” Bank for more than “X” years!  They have been very good to me.”  These banks are so good to their customers that they are allowing them to take out credit cards that are linked to their bank accounts.  What the consumers don’t realize is that if they are behind on their payments, the banks have the ability to offset the debt by taking the money from their customer’s bank accounts.  They are able to do so because the contracts signed (which most people don’t read) allow them to do so.  Thus, consumers are surprised to find that when it comes time to send off the rent check or mortgage payment, they don’t have the money to do so because their bank already has a chunk of their money.  To avoid this scenario, do not bank at an institution where you owe money.  Some consumers think they are safe if they do not have the funds in their bank accounts.  This is not always true.  Banks can still offset the debt, and then you would be considered overdrawn, and now you would owe bank fees and bounced checks due to non-sufficient funds.

Paying Down Debt

If you were trying to avoid bankruptcy, then paying down your debt is a great idea.  However, if you already know that your only available option is to file bankruptcy, you should not be paying back your creditors, especially your family and friends, whom are considered “insiders.”  Paying creditors back is considered a “preference.” If you have paid back more than $600 to an “insider” in the past year, the trustee has the option of going after the person you paid back to get the money back for the bankruptcy estate, if the funds are significant enough.

Receiving Inheritance

If you believe you are listed as a beneficiary in a will, trust, or life insurance policy, and you are about to receive the inheritance within the next six months, you may not wish to file for bankruptcy.  Any proceeds received within 180 days of the filing of your bankruptcy petition are considered to be a part of your bankruptcy estate.  If you receive a substantial inheritance, there may not be enough exemptions to protect the inheritance, and in a Chapter 7, the inheritance could be used to pay off your debt to your creditors.  Thus, if you think you will receive a substantial inheritance, you may be better off trying to negotiate with your creditors instead.

Lying to Your Attorney

If you retained the services of an attorney to proceed with your bankruptcy case, it is imperative that you do not lie to them about your finances.  You should not hide your assets from your attorney, nor should you lie by omitting certain important information regarding your situation to your attorney.  Your attorney cannot protect you if they do not know about your problem.  If there was an issue in your bankruptcy case, you do not want your attorneys to be the only one in the room surprised by the problem.  Your attorneys are not mind readers, they would not know that they need to help you if you do not tell them.

If you need the help of an experienced bankruptcy lawyer or bankruptcy lawyer in Union City, call us today at 877-9NEW-LIFE or 877-963-9543 to schedule a free consultation.