subject: Considering Declaring Bankruptcy? A List Of Some Things You Should Never Do: Part Two [print this page] In the last article in this two part series I gave you a short synopsis of what bankruptcy was, what each chapters meant, and a list of things to avoid doing once you have made the decision to declare bankruptcy. Continuing on, if you are filing for bankruptcy, do not liquidate your retirement account. First, it is unnecessary to do this because retirement accounts are typically exempt property under the law, no matter what chapter you file. Plus, if you withdraw this money early, this means liability for penalties and taxes which may not be discharged in your bankruptcy.
This next "don't" won't make you feel so good, but it is prudent to do so. When you are paying back creditors, don't favor your family members. This is because even though they may be your blood, as far as the law is concerned, relatives have the exact same legal status as all of the other creditors that you owe. It is understandable that you may want to pay back the people you love nearly and dearly the most, but bankruptcy courts are not exactly known for eliciting warm, fuzzy, sympathetic feelings.
Before you file for bankruptcy, do not transfer property out of your name. If a reasonable price wasn't received, this action can be canceled out, and it can certainly be undone if it were made with the purpose to hinder, defraud, or delay a creditor. Relatives and friends can fall into this category as well.
Do not utilize your equity line of credit to pay off your creditors. This is because under most state and federal laws, you have the capacity to claim exemption for your home equity. So if you do not use your equity line, you can file for bankruptcy and still be able to hold onto your equity. Think about it in this way: if you utilized your equity line to pay back creditors or to take out another mortgage, what you would be doing in a nutshell would be converting debt that could have been discharged in bankruptcy into debt that you will still have to pay in order to keep your home.
To finish the article I will give you one DO: make sure you have a good lawyer, and always tell her the full truth and let her know all of your worries and concerns. Courts take themselves very seriously and have the capacity to file criminal charges if you intentionally commit fraud. And even if they did not go that far, they always have the ability to discharge any debt that they want, or even to simply dismiss the entire case.
