Don’t Do This Before Declaring Bankruptcy

lady giving stop sign with her hand

A fresh start means getting an opportunity to start over without any past obstacles holding you back.

When under financial stress, it can be tempting to follow through with whatever solution presents itself first. However, making a hasty decision without having a well-thought-out plan beforehand can lead to more problems than it solves.

Filing for bankruptcy provides you with a clean slate, as it stops any legal action from being taken against you while keeping the creditors off of your back. While the much-needed breathing space will help you get your affairs in order, there are a few key things to avoid that may jeopardise your ability to claim a bankruptcy discharge.

Bankruptcy is your chance at getting a clean slate, but there are a few common mistakes to look out for before making your declaration.

Lying About Your Assets

Frankly, lying in general will always land you in hot water.

When filing for bankruptcy, you’re required to provide your trustee with all the necessary and accurate information needed. One of the documents you sign is called the Statement of Affairs. If you lie about any information on this document, you can be severely penalized.

Concealing any assets, income, or debt will be considered as perjury. As a consequence,  your claim will be discredited and penalties such as criminal conviction or imprisonment may be imposed.

If you’re expected to receive funds such as a bonus at work, an inheritance, or a tax refund, you will be required to disclose this to your trustee.

Avoid New Loans Right Before Filing

In addition to credit card debt, taking out a new loan 70-90 days before filing for bankruptcy can be considered presumptive fraud and lead to having your claim discredited.

Unless it was for life necessities such as food, clothing and utilities, you should avoid taking out cash advances or using your credit card to buy luxury items.

Borrowing money you know you cannot repay or think will be included in your bankruptcy claim may be considered fraud, meaning you’ll have to pay the full amount back and your debts will not be forgiven.

Don’t Move or Sell Assets

Similar to lying about some of your assets, transferring or selling your assets while filing for bankruptcy will result in having your discharge denied and may be subject to criminal charges.

Before filing, your trustee will ask about any assets that have been transferred or sold in the past five years. If you sold any property, stocks, or other assets to pay utility bills or purchase life necessities, you will not be penalized.

However, selling assets to hide them from creditors will cause your debt discharge to be denied.

Wipe the Slate Clean With Lazard and Associates

Filing for bankruptcy can be a life changing experience, but in order to make it a positive one, there are a few critical rules to follow.

The first step in your bankruptcy journey is finding a Licensed Insolvency Trustee to work with. These professionals know all the ins and outs of bankruptcy law and will guide you through the process. The chances of forgetting a document, key information or becoming misled on the process are incredibly high when trying to file a claim on your own and may result in getting a denied discharge.

Our bankruptcy trustees at Lazard and Associates have years of valuable experience to help free you from all your debts. We’ll work closely with you to ensure the best outcomes while happily addressing any questions or concerns you may have.

Get in touch with us to learn more about declaring bankruptcy and get a free, no obligation consultation today.