Filing for bankruptcy can be a daunting process, and it’s important to know what to do and what not to do before you begin. Many people make mistakes that can harm their case or even disqualify them from filing altogether.
One common mistake is to transfer assets to friends or family members before filing for bankruptcy.
This is known as a fraudulent transfer, and can lead to your bankruptcy case being dismissed. It’s important to be transparent about your assets and not attempt to hide anything from the court.
Another mistake is to take on new debt or make large purchases before filing for bankruptcy. This can be seen as an attempt to defraud your creditors, and may lead to your case being dismissed or even investigated for bankruptcy fraud.
It’s also important to avoid dipping into retirement accounts or other protected assets before filing for bankruptcy. These assets are typically exempt from bankruptcy proceedings, and using them to pay off debt can harm your financial future.
In short, it’s important to be honest and transparent about your assets and debts, and to avoid any actions that could be seen as an attempt to defraud your creditors. Working with a knowledgeable bankruptcy attorney can help you navigate the process and avoid common mistakes.
What Is Bankruptcy Fraud?
Bankruptcy fraud is knowingly and fraudulently concealing assets or making a false oath or statement under penalty of perjury and that can be done either orally or in writing when it’s done in connection with your bankruptcy case.
The consequences of committing bankruptcy fraud are serious, including up to 20 years in federal prison and/or up to $250,000 in fines. Any information supplied in connection with a bankruptcy case is subject to examination by the attorney general and other officers or employees of the Department of Justice. Furthermore, organizations and federal agencies whose job it is to look for fraudulent activities may examine the bankruptcy filing.
What Are Some Of The Worst Things People Do Before Bankruptcy?
Most of the clients at Lincoln-Goldfinch Law Firm are honorable and ethical, but there are still people out there who commit fraud before filing for bankruptcy.
One of the worst things people do is not filing their tax returns for the four years prior to filing for bankruptcy. Failure to file tax returns is a requirement, and if not done, can lead to fines and even prison time, as seen in the case of Real Housewives of New Jersey star, Teresa Giudice and her husband.
Another common mistake is not reporting income from various sources, such as TV appearances and sales of merchandise, as seen in the case of Abby Lee Miller, one of the Dance Moms stars, who also received prison time, fines, and restitution payments.
Professional sports also see a high degree of bankruptcy, with up to 16 percent of NFL players filing for bankruptcy within 12 months of leaving the NFL. This often leads to fraudulent behavior, such as hiding assets when filing for bankruptcy, which can result in serious consequences, as seen in the case of baseball player Lenny Dykstra.
Why Lying To Your Bankruptcy Attorney Is A Bad Idea?
First of all, your bankruptcy attorney is there to help you. They want the best outcome for you and your financial situation. If you lie to them, they won’t be able to provide you with the best possible advice or guidance.
But it’s not just about getting good advice. When you hire a bankruptcy attorney, everything you tell them is confidential under attorney-client privilege. This means that your attorney can’t share what you tell them with anyone else, including the court.
However, if you lie to your attorney, they won’t be able to protect you to the best of their ability.
They won’t be able to anticipate any issues that may arise and take proactive steps to protect you. This could result in negative consequences for you down the line.
So, the bottom line is that it’s much better to be honest with your bankruptcy attorney. They’re there to help you and everything you tell them is confidential. By being truthful, you’ll enable them to provide you with the best possible guidance and help protect you in the long run.
Is The Internet The Best Place For Legal Advice?
No, the internet is not the best place for legal advice. While there are many resources available online, including articles, forums, and blogs, it’s important to remember that every case is unique and the law can vary by jurisdiction. It’s also difficult to ensure the accuracy and reliability of information found on the internet, as it may not be up-to-date or provided by a credible source.
In addition, legal advice provided online may not take into account all of the details of a specific case, which can lead to incorrect or incomplete advice. It’s important to consult with a qualified attorney who can provide personalized legal advice based on the specifics of your situation.
Overall, while the internet can be a helpful starting point for legal research, it’s important to seek the advice of a qualified attorney for accurate and reliable legal advice.
What Would Happen If I Forgot To Declare Assets In Bankruptcy?
It’s crucial to keep in mind that bankruptcy is a legal procedure, and withholding or falsifying information about your assets can lead to severe consequences.
If it’s discovered that you didn’t reveal all of your assets, it could result in your case being thrown out, or worse, accusations of fraud.
However, if it’s a genuine mistake, there may be an opportunity to rectify the situation.
If you unintentionally left out an asset, you may be able to update your asset list and include it later. But it’s crucial to be truthful and straightforward about it. Attempting to conceal assets or lying about their existence could result in significant problems.
Even in cases of honest mistakes, negative consequences may still arise.
For example, one bankruptcy attorney had a client who was unaware that they were co-owners of a vacation property with their spouse. This property was discovered during a record search, resulting in the case being dismissed for abuse.
Therefore, they could file for Chapter 13 bankruptcy and compensate creditors with the same amount as the value of that asset.
To summarize, it’s always essential to be truthful and open with your bankruptcy attorney. They’re there to help you, but they can only do so if they have all of the relevant information. Honesty is the best policy, and it can save you a lot of trouble in the long term.
Common Things People Do Before Filing For Bankruptcy That Negatively Impacts Them
It’s important to follow expert legal advice before filing for bankruptcy. People often make common mistakes that can negatively impact them during the process.
One of the most significant missteps is not heeding the advice of an experienced attorney when preparing a bankruptcy petition. Every year, many individuals receive tax refunds at the beginning of the year, but there are specific parameters to follow, and it’s crucial to take necessary steps around those refunds.
The best course of action is to listen to the advice of an attorney who has been helping clients navigate the complexities of bankruptcy for years.
The hardest part of bankruptcy is getting ready to file. A client received a fishy email from a creditor after filing their case, but they did the right thing by contacting their attorney right away.
They understood that anything that affects their checkbook, bank account, or property needed to be brought to their lawyer’s attention. By promptly reaching out, they avoided any negative consequences.
Remember that an experienced attorney can help individuals avoid common pitfalls and ensure that their bankruptcy goes as smoothly as possible. They can guide clients through the process, protect their interests, and ensure that they have a worry-free and prosperous future.
Trusting the attorney-client privilege and taking expert legal advice can make a world of difference when filing for bankruptcy.
Can My Previous Action Negate My Chances For Bankruptcy?
Bankruptcy can be a viable option for anyone, but it is important to approach it with caution.
Filing for bankruptcy may not necessarily guarantee a smooth process. In fact, any errors or discrepancies in your filing could lead to dismissal of the case, costing you valuable time, money, and stress.
It’s fundamental to consult a trusted bankruptcy lawyer to guide you through the process and advise you on your options.
In certain cases, factors such as an expected inheritance or large retirement fund payout may cause delays and necessitate a waiting period before filing for bankruptcy. It’s crucial to discuss these scenarios with a knowledgeable bankruptcy attorney to determine the best course of action for your specific case.
One key piece of advice from bankruptcy expert Amy is to be honest and transparent throughout the process.
Contrary to popular belief, the majority of bankruptcy filers are hardworking, honest individuals who are simply seeking a fresh start.
By consulting with a trusted attorney and following their advice, many individuals are able to overcome their financial struggles and emerge from bankruptcy with a more secure financial future.
If you have additional questions about your bankruptcy, or your specific case, you can contact us at (855) 502-0555. After a brief 10-minute evaluation of your case over the phone, we will let you know what options you have. You can also follow us on our social networks so you don’t miss our weekly broadcasts on Facebook, YouTube, and Twitch.
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