Bankruptcy Do’s and Don’ts

One of the benefits of working with a bankruptcy attorney is gaining an expert who will help protect you from the pitfalls of complex Nevada bankruptcy law. Bankruptcy involves many procedures and rules that must be followed or you risk losing assets you could otherwise have kept or increased the overall financial cost of bankruptcy.

The following tips can help you make wise decisions in your Chapter 7 or Chapter 13 bankruptcy. Here’s what you should and should not do BEFORE you file for bankruptcy.

Bankruptcy DO’s

• Be honest about assets and debts. Your bankruptcy attorney can only help if you are honest. Vegas BK is here to represent you and we can only offer a feasible solution and help you achieve the best results if we understand your financial situation.
• Do get credit counseling because there may be a wait. You don’t want to be prepared to file for bankruptcy and then find out you need to wait until you get credit counseling.
• Do close bank accounts if you owe the bank or credit union money. You should have a bank account open, but be aware that if you have any secured property or a credit card at the same bank where you have a savings or checking account, the bank can withdraw funds to cover the debt.
• Maintain records before you consult with an attorney if possible.

Bankruptcy DON’Ts

Don’t withdraw money from a 401(k) account. This account is generally exempt in bankruptcy, but early withdrawals can subject you to penalties and taxes that can’t be discharged.

Don’t make large purchases or cash advances with credit cards before filing for bankruptcy. This may prompt the court to consider your petition fraudulent and get your claim dismissed.

Don’t transfer property out of your name. Hiding assets is illegal and you can get your bankruptcy dismissed or face legal ramifications. An experienced bankruptcy attorney can help you explore legal options for protecting assets.

Don’t fail to file income tax returns. If you do not file income tax returns for a minimum of two years before you file for bankruptcy, it can make your petition incomplete and make it almost impossible to get a Chapter 13 plan approved. You will need to file tax returns to move forward with bankruptcy.

Don’t selectively repay loans to relatives or friends within one year of filing. Preferential transfers can be undone by the bankruptcy trustee to get the money back from the entity or person.

Don’t leave a creditor off the bankruptcy paperwork in the hope of “saving” a credit card.

Don’t wait too long to file. Do not ignore impending collection actions by creditors. If a creditor gets a judgment against you, they are likely in the process of repossessing a car, foreclosing on a home, garnishing your wages, or getting a levy against your bank account. Advise creditors right away of your intention to file bankruptcy.

Don’t file if you are about to receive substantial assets. You cannot hide assets in bankruptcy, but you may want to reconsider filing if you are going to receive an inheritance within a year, a large income tax return, a lawsuit settlement, or loan repayment. You may be able to use the money to settle with creditors and get out of debt without bankruptcy.

During Bankruptcy

DO continue making payments on the property you intend to keep, such as your home and car, or your creditor can repossess the property. You should also pay basic expenses.

DO NOT speak with creditors without your attorney present.

Contact a Las Vegas Bankruptcy Attorney

If you have made mistakes during or before your bankruptcy, it’s important to consult with a qualified bankruptcy lawyer to discuss your next step. Depending on the situation, you may delay filing Chapter 7, convert to Chapter 13 to resolve non-dischargeable debt issues, or forgo bankruptcy and explore other options available to you. A bankruptcy attorney can help you understand your options and decide what’s best in your situation. Contact the Las Vegas Bankruptcy Lawyers at Vegas BK for a free consultation with an experienced Nevada bankruptcy lawyer to go over your options.