What You Need to Understand When Filing for Bankruptcy – Part 2
This article is the second part of a two-part series. Be sure to check out the first part here before proceeding with the article below.
In the previous article, we discussed why you shouldn’t rush or prolong your bankruptcy. However, there are also other things that you need to understand when you are filing for bankruptcy. Keep reading below to learn more about what you need to understand.
Don’t Take Out New Loans
If you are filing for bankruptcy and the creditor sees that you are taking out new loans and adding to your debt, they may dismiss your filing. In addition, you may even be charged with fraud if it looks like you are taking out a loan without the intention of paying. Unless you can argue that the loans are for necessities (food, water, utilities, shelter, or clothing), you must avoid taking out any additional loans.
Don’t Attempt to Transfer Assets
If you are in the middle of filing for bankruptcy, avoid transferring any assets. You might be tempted to protect them from being taken away, but doing so could put you in the middle of fraud charges, and your filing may be discharged. If you did end up selling assets before filing to pay for your necessities, be ready to explain so with supporting documents. Otherwise, keep your assets in place.
Disclose All Necessary Information
When filing for bankruptcy, you will be required to disclose a lot of your financial information or situation. Some of the information they may need includes the following:
- Income sources (prior and current)
- Any payments that have been made to creditors, family, and friends
- Any losses to disasters, thefts, gambling
- Properties that have been moved, transferred, or sold off
- Active and inactive financial accounts
- Business status, whether ongoing or previous
If the court and/or trustees suspect you have made any false statements, an investigation may be launched. You will be fined up to $250,000 or imprisoned for up to 20 years if you make any false statements or fail to disclose any necessary information requested.
Don’t File If You Have Substantial Assets to Receive
If you haven’t filed for bankruptcy and are expecting to receive any substantial assets (inheritance, a huge sum of money as a payment for a loan, a lawsuit settlement, etc.). In that case, you should consider not filing for bankruptcy. These assets may help you pay off your creditors and avoid bankruptcy. This could save you a lot of time, money, and trouble compared to filing for bankruptcy.
Don’t Forget Your Income Tax Returns
Unless you are exempted from filing tax returns, don’t forget to keep your tax returns up to date. This is important as it will help determine your current financial situation. Additionally, if you have been found to not have been filing your tax returns, additional punishment and penalties may be given, which could put you into even hotter waters than where you already are.
Consulting with a Professional
In any case, when filing for bankruptcy, it is crucial to consult with a professional. This way, you can avoid making any errors that could make things more difficult. Consulting with a professional will help you make the best decisions despite your hard situation.
If you need a bankruptcy lawyer in Dallas, you can hire Angela R. Owens. Bankruptcy is a scary situation, but Angela R. Owens will be glad to guide you through your difficult position to make sure that you make the right decisions. Get in touch with Angela R. Owens and get through bankruptcy today.