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Dos and Don'ts when filing for Bankruptcy

THE DO's

DO take bankruptcy seriously. It is a constitutional right, and courts take a very dim view of abuse of that right.

DO be honest and forthcoming on your bankruptcy petition. It is against the law to lie in bankruptcy proceedings. That means spill your guts out; you are sacrificing a small portion of your privacy to get a discharge of your debts. If you lie on your petition, or if you conceal assets, you could get in very serious trouble. The least that will happen is that your petition could be dismissed.

DO be honest and forthcoming with your attorney. Even if it is embarrassing, even if it makes you look like an idiot or a crook, it is better if your attorney knows. Giving your attorney insufficient information is like hiring a chauffeur and not telling him or her that your brakes don't work. Anything that isn't listed in your petition may not be discharged.

DO make yourself available to your attorney for discussions regarding the case, especially preparation of the petition and appearance at the meeting of creditors. It is not a waste of your time if it helps you to have an uneventful bankruptcy.

DO follow your attorney's advice about how to behave in the meeting of creditors. Remember, he or she does this almost every day. Don't be afraid to ask him or her if something is appropriate. It's one of the things that you are paying your lawyer for. Your attorney will tell you what he or she wants from you if the Trustee or creditors ask you unexpected questions.

DO consider alternatives to bankruptcy. If you can pay your debts, there may be other things you can do. There are credit consultants and debt consolidators who may be able to help you get through this rough time in your life.

DO give your attorney EVERYthing in your relevant financial files, again even if it is embarrassing or incriminating. If you have the document, the odds are someone else does too.

THE DON'Ts

DON'T assume that bankruptcy will get rid of all your debts. Some tax liabilities are nondischargeable (basically, all tax liability accrued in the three tax years prior to filing are non-dischargeable in most circumstances). Student loans are now nondischargeable except in cases of extreme hardship. Domestic Support Obligations are also not dischargeable.

DON'T talk to your creditors directly after you have filed for bankruptcy. Tell them to talk directly to your attorney. If you receive mail from them, forward it to your attorney immediately.

DON'T forget to consider saving some of your credit cards. If any of your credit cards have zero balances, you may be able to keep them. Some card providers may ask you to reaffirm your debt in return for keeping a card, and this is worth considering, especially if there is a small balance. Life can be a lot harder without a credit card.

DON'T keep a creditor off your petition for any reason. If you intend to pay them back, you can anyway.

DON'T run up a lot of bills immediately before you file. If you max out your credit cards or take out a loan before you file, the court could find your petition to be fraudulent and dismiss it, or except those debts from discharge.

DON'T unnecessarily spread the news that you have filed for bankruptcy. It is your business, and unfortunately there is still a stigma attached to bankruptcy. Your friends and your employers don't have any right to know that you are in financial trouble.

 

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