Before filing for bankruptcy, there is a significant amount of preparation that you should take to ensure that nothing adversely affects the bankruptcy process. An experienced bankruptcy attorney is an invaluable resource when determining what steps you should take to prepare. Some actions can have a negative, or even irreversible, effect on your bankruptcy. Here are some common mistakes to avoid.
When you’re filling out the bankruptcy paperwork, and at the creditors meeting, it’s essential that you provide complete and accurate information about all assets, debts, income, expenses, and anything else pertaining to your financial history. You are doing so under the penalty of perjury. To knowingly misrepresent any of this information is to risk criminal prosecution. Fill out the paperwork carefully. Make sure you answer all the questions and include all the information requested; only leave something blank if you’re sure it doesn’t apply to you. If you leave something out that should have been included, it can cause problems later on in the bankruptcy process.
It’s also crucial to have filed your income tax returns. If you have not filed your returns for a minimum of two years prior to filing for bankruptcy, it makes completing your petition, schedules, and statement of financial affairs extremely difficult. Furthermore, it can effectively bring the bankruptcy process to a halt. Your tax returns are necessary to determine your past and current earnings and asset holdings, and to satisfy potential priority tax claims. Under chapter 13 the court and trustee will require all returns that you were required to file within the previous four years be filed within the first couple of months of the case. If you fail to do so the court can dismiss the case.
Do not run up any additional debt within the 70 to 90 days prior to filing for bankruptcy. If you do, the creditor(s) can object to your discharge on the grounds that you ran up the debt fraudulently (that is, without any intention of paying it back). A possible exception is if you took out a payday loan as part of a cycle of cash advances and repayment. An experienced bankruptcy attorney can help guide you through the process of preparing for bankruptcy to ensure that your filing goes smoothly.