Bankruptcy Do’s and Don’ts – By Sue Hachem, Attorney of Counsel

When facing a mountain of debt, it is easy to become increasingly overwhelmed and lose sight of the light at the end of the tunnel. The following are important tips to keep in mind if you are filing or considering filing for bankruptcy.

The Do’s

  1. Do compile the information necessary for your bankruptcy attorney to begin working on your case. Gather income tax returns for the last two years, six months of wage stubs, title(s) to any vehicle(s) that you own, recorded deeds and mortgages, bank account statements, life insurance policies, retirement account statements, and any other information on your income and assets.
  2. Do continue making payments on secured collateral that you intend to keep (e.g. you home and/or personal vehicle).
  3. Do disclose to your attorney if you are expecting to receive an inheritance, insurance payment or any other that would enable you to repay your creditors.
  4. Do cooperate with your attorney. Make yourself available and timely respond to questions or requests for information.

The Don’ts

  1. Don’t borrow from or withdraw 401kIRA, and ERISA qualified savings and retirement plans to pay bills. Discuss this with your attorney promptly.
  2. Don’t transfer property out of your name to avoid it being seized by creditors. Doing so may be considered fraudulent and may result in a denial of your discharge.
  3. Don’t pay back friends, relatives, or business associates money that you’ve borrowed from them. If you do this before you file for bankruptcy, these are considered preferential transfers and can be undone by the trustee (i.e., the trustee may sue your friend, relative or business associate to recover any money you gave them within one year of filing for bankruptcy).
  4. Don’t abuse the process. In the months leading up to your bankruptcy filing, don’t incur substantial credit card debt, in anticipation that you will discharge those debts in bankruptcy.  For example, debts for luxury goods or services incurred in the 90 days before your bankruptcy filing and exceeding $550.00 are presumed to be non-dischargeable in bankruptcy.

This is provided for informational purposes only and not for the purpose of providing legal advice particular to your situation. If you have specific questions or need help with eliminating your debts, contact our office today at 248-595-8617 to schedule a free, initial consultation.