As a NYC bankruptcy lawyer, people tend to ask, “What should I do to file for bankruptcy?” Sometimes an equally important question is “What should I not do?”
Keep in mind, this information may change from state to state so consumers filing for bankruptcy should only use it as a frame of reference. Consumers filing for bankruptcy should speak to their local bankruptcy attorney to get a clearer indication of the do’s and don’ts for their own particular situation. By following this list, consumers can potentially avoid additional issues and protect assets.
1) Don’t Wait
No one wants to file for bankruptcy, however bankruptcy typically better positions debtors to receive a fresh start financially. Waiting too long to file gives creditors the opportunity to seize assets by garnishment and levy. Also, the longer you wait, the more likely you are to deplete protected assets such as retirement funds. Garnishment, foreclosure and repossession can all potentially be stopped by filing bankruptcy. Contact an attorney to better understand your options and how bankruptcy can benefit your specific situation.
2) Do not file for bankruptcy without an attorney
Although consumers can file for bankruptcy without an attorney its not recommended. In fact, even uscourts.gov recommends hiring a competent attorney. Its important to understand that bankruptcy has long-term financial and legal consequences. Bankruptcy laws are very technical and a minor misstep may affect a debtor’s rights. For example, a debtor that had their cased dismissed for failure to file a required document such as a credit counseling certificate can lose the right to file another case or lose protections in a later case. An attorney such, as David I. Pankin, is familiar with bankruptcy law. He and other experienced bankruptcy attorneys can provide clients with the right instructions and help guide the debtor towards a more successful filing.
3) Do Not Use Your IRA, 401k or other Qualified Retirement Plan to Pay Creditors
These types of retirement plans are typically protected from creditor’s claims. Using these resources to pay creditors is not necessary. There may be circumstances where it makes sense to utilize your retirement plan to help pay certain bills however, its important understand that these accounts are protected and you should think twice before utilizing this resource.
4) Do Not Wait Until Tax Season to Protect Your Tax Return
Don’t wait until tax season to protect your tax return. Many people don’t think about protecting their tax returns until they are ready to file taxes however, you shouldn’t wait until tax season to start. Plan ahead. There are opportunities in which one can protect their tax refunds but they may require some planning. Speaking with a bankruptcy attorney and accountant can help better position you for a better refund.
5) Do Not Pay Back Friends/Relatives
Bankruptcy law is not only designed to be a safety net for debtors but it also protects creditors as well. The bankruptcy code is designed to prevent creditors from liquidating their assets prior to filing. Attempting to pay a family member or friend back for borrowed money can create additional issues for both creditors and the individual that received the payment. They can be sued to get the money back into the bankruptcy estate.
6) Do Not Transfer Assets Prior to Filing
As mentioned previously, bankruptcy law is designed to protect debtors and creditors alike. Blindly transferring assets to a friends or family members can create additional issues. If not done correctly, selling your car or jewelry to a friend can create additional issues for the debtor and the recipient of the assets. There are circumstances in which an experienced bankruptcy lawyer can assist in successfully transferring assets. These types of transactions must follow the law and when possible, an experienced bankruptcy lawyer such as David I. Pankin can provide debtors with the proper procedures to facilitate such transfers.
7) Do Not Over Charge on Your Credit Charge
Creating more debt by surreptitiously charging your card or taking cash advances prior to filing for bankruptcy will look extremely bad in the eyes of the bankruptcy court. If your spending habits on your credit cards is very easy to track. If your habits change within 6 months of filing for bankruptcy it can become more difficult for an attorney to receive more positive results for their client.
8) Do Not Forget To List All of You Creditors
You must list all of your creditors on your bankruptcy petition including friends and family members. If you forget a creditor the debt for that creditor may not be discharged. Even if you intend to repay a creditor, you should include them on the list.
9) Do Not Ignore Letters From the Court and Your Attorney
Any correspondence you receive from the Bankruptcy Court or your attorney is important. You should respond to any letter or requests you receive from you attorney. You should let your attorney know of any notices received from the Bankruptcy Court so he/she is aware of the situation. If you are receiving correspondence from either your attorney or Bankruptcy Court, its probably important. You should reply timely to avoid potential issues.
Know Your Options
In all, debtors filing for bankruptcy should discuss their options with a qualified bankruptcy attorney. Knowledge is power, and knowing your options can better position yourself for a fresh start. Speaking with a local attorney such as David I. Pankin, a bankruptcy lawyer in New York can set you on the right track for financial recovery. With offices in New York City, Brooklyn and Long Island David I. Pankin P.C. services clients through the New York Metro Area. Call David I. Pankin P.C. at 888-529-9600 and receive a free consultation.