Bankruptcy could result in significant financial implications. Many people make mistakes during the bankruptcy filing, because they are not aware of them. Before a bankruptcy proceeding, some people transfer their property and asset to other person. We should know that this won’t work and the bankruptcy court will check assets and funds that we transferred in recent dates. Other people could also transfer credit card balances to a new card, creating a new debt. In this case, the balance transfer can be presumed fraudulent, especially if the transfer is of $1500 and within 60 days before filing. People may also not include all their debts in the bankruptcy documents.
By law, we are required by law to list all of our debts in the document. If we want to keep our car and house, it is recommended to file Chapter 7. Many people have fear towards lawsuits and they could tend to ignore lawsuits. In order to avoid worries, it is recommended to attend court hearings before filing the bankruptcy. It is also not a good idea to withhold information from our bankruptcy lawyer. The lawyer should get any requested information, so we can be advised on the best way to protect our assets and income. Individual failing to disclose important information can cause unwanted problems.
People file for bankruptcy may think that it’s a financial apocalypse for them. They could cash in IRA, 401(k) and other retirement funds. In reality, these funds are protected from the reach of the creditors and we are allowed to keep them during a bankruptcy process. It is likely that we owe debts, taxes and penalties. Because the money is no longer protected, it could be taken out by creditors. It is also not a good idea to file bankruptcy when we are about to receive big tax return. In some cases, tax refund can be considered as an asset. It is a good thing to receive our tax refund and use it as we see fit, before filing for bankruptcy.
Problems may also happen if we wait until the last minute before we file bankruptcy. Automatic stay status is activated when we file a bankruptcy and this prevents creditors from performing collection activities against us. Depending on our financial situation, bankruptcy process could be quite time consuming, as we need to review relevant documentation and do other related tasks. Once we consider that bankruptcy is the best solution, we shouldn’t delay it any longer.