Good Fences And Not So Good Neighbors: Property Law 101

3 Things You Should Avoid Doing Before Filing For Bankruptcy

8 June 2016 by Hunter Moore

Filing for bankruptcy can be a very helpful thing for many people. If you are too far in debt, bankruptcy may be the only way to get the new beginning that you need and get back on steady financial legs. However, if you do choose to file bankruptcy it is very important that you avoid making some mistakes that could potentially harm your ability to get approved for bankruptcy. Here are some things you need to know.    

1. Don't Rack Up Any New Debt

As you prepare for bankruptcy it is important that you don't rack up any new debts. For instance, you shouldn't go to a place that will do payday loans and take out a loan when you know it is only a matter of time when you are going to have file for bankruptcy. This will seem fraudulent and like you got into the debt with no intention of paying it back. This could become a problem for you when it comes time to file.

2. Don't Start Selectively Paying Off Debts

When you file for bankruptcy the court will decide how to allocate any resources that you have.  There are certain debts that are secured that will need to be paid back before other ones can be paid. If you start paying off debts to family or certain businesses that aren't secured it could become a problem. In fact, if it looks like you were giving special treatment for family and friends, and failing to pay off your secured debts you could get in trouble. This is why you need wait until the court tells you what to do with the money before you start choosing whom you will pay back and who will not get their money.

3. Don't Fail To File Taxes

Lastly, it is very important that you are up to date on all of your taxes before you file for bankruptcy. You cannot file until you have fully paid and taken care of all of your taxes. If you have not filed taxes for years you need to meet with a tax preparer, perhaps even a tax or bankruptcy attorney (click here for more information) who can make sure that everything is up to date and truthful. If you are missing taxes there is a chance that your bankruptcy will not be approved.

By understanding what not to do when preparing for bankruptcy, you can protect yourself.

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