Do’s and Don’t’s if you are thinking of bankruptcy

Thinking of filing bankruptcy?  Here’s a list of Do’s and Don’t’s before bankruptcy:

1.  Do file your taxes – According to the bankruptcy code, a person must have filed the last four years of taxes in order to be eligible for a discharge.  If you haven’t filed your taxes, you can still file bankruptcy, just be prepared to get your taxes filed asap!

2.  Do keep copies of your personal records – You will need to provide your attorney with six months of income records (usually pay stubs), along with bank statements and tax returns.  You may need to provide your attorney with information about creditors that are not listed on your credit report also.

3.  Don’t withdraw money from a retirement account  – Retirement accounts are exempt property which means they are protected from your creditors and you get to keep those accounts if you file bankruptcy.  Additionally, withdrawing money from retirement accounts normally has unpleasant tax consequences!

4.  Don’t borrow money right before you file bankruptcy – This includes “maxing out” credit cards or getting cash advances on cards.  Any creditor that feels that you didn’t intend to repay the debt you incurred right before bankruptcy has the option to file a lawsuit in bankruptcy (called an “Adversary Proceeding”) to make you pay that debt.

5.  Don’t pay off credit cards – Unsecured debt is normally the easiest debt to wipe out in bankruptcy.  It should always be your last debt to pay!

6.  Finally, the most important thing to do if you are thinking of filing bankruptcy is to speak with an experienced bankruptcy attorney!  Bankruptcy law is complicated – you don’t want to risk filing without professional help.

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