If you are having trouble paying your bills, bankruptcy might be the solution you’re looking for. But before you start the process, it’s important to know some do’s and don’ts to make sure that the process moves smoothly. For example, certain decisions you make, such as transferring a house into another family member’s name, can limit your bankruptcy options.
To help you prepare for a successful bankruptcy in New York, here are the do’s and don’ts to follow.
DO speak to a bankruptcy attorney.
Most bankruptcy lawyers in NY, including the Law Office of William Waldner, offer free consultations. Take advantage of these appointments, as they’re an opportunity to learn about bankruptcy and how it applies to your situation. A consultation does not mean that you are definitely filing bankruptcy.
DON’T transfer property or money.
Transferring property or money before declaring bankruptcy is not an option. Avoid selling or transferring assets to your friends or relatives to hide them from the courts. The trustee will ask about any transfers at the start of your case, and if you’re hiding anything, the courts might dismiss your case.
DO be open and honest with your attorney.
When you do start working with a bankruptcy lawyer in NY, be sure to tell them everything. Even though you might be embarrassed, your lawyer can only help if they have an accurate picture of your assets and debts. Anything that isn’t listed in your petition may not be discharged.
DON’T incur any new debt.
Talk to your bankruptcy lawyer if you plan to make any big purchases. It might be okay to secure a car loan before filing bankruptcy, but you don’t want to make unnecessary purchases like plane tickets or electronics. These purchases can complicate your bankruptcy case, as creditors can object to any major purchases made within three months of the filing date.
DO keep track of your expenses.
Many individuals don’t realize where their money is going. Take time to write down all of your expenses, and be as accurate as possible. Some expenses may be questioned, so you’ll want to have the correct documentation. If the courts feel that what you’re spending is unreasonable, they may not allow the full amount.
DON’T take money from your retirement accounts.
When you’re in need of money, your retirement account can look attractive. However, avoid borrowing or withdrawing from your retirement. Your tax retirement account is protected from the creditors, but once you withdraw this money, it loses its protections. Plus, you could be held liable for taxes from an early withdrawal.
DO keep current on payments for non-dischargeable debts.
Some debts are not dischargeable, including student loans, alimony and child support. This means the debts will still be there even after your bankruptcy case is complete. For more direction, talk to your bankruptcy attorney. But generally speaking, you’ll want to keep paying these debts.
DO separate your money.
If you have money that is protected – Social Security or a settlement from a personal injury lawsuit – put it in a separate account so that you can be clear about where it came from. In most cases, the trustee can’t go after this money to pay your creditors. But they must be able to trace the source of the income, so keep it separate.
Bankruptcy is designed to protect people who are going through financial troubles. So, don’t be afraid to explore bankruptcy and the benefits it can offer. When you work with an experienced bankruptcy attorney in New York, it’s a perfectly legal process that will wipe the slate clean and help you get back on your feet.
DO file your taxes.
Make sure that you are current on your tax filings before filing bankruptcy. With a Chapter 7 bankruptcy, the court will require you to provide your most recent tax filings. In a Chapter 13 bankruptcy, the courts will ask you to file the last four years of tax returns.
DON’T negotiate with creditors.
Once you file bankruptcy, an automatic stay goes into effect. This automatic stay stops the creditors from contacting you. Therefore, you don’t need to negotiate debt reduction, or else this could trigger tax consequences. Once you file bankruptcy, you’re protected from the creditors.
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Bankruptcy is an effective way to help people get rid of their debts, but it’s not without consequences. Contact the Law Office of William Walder to discuss your situation and how filing bankruptcy can help. We are here for you, and we’ll help you make the best decision for your circumstances!