Bankruptcies are not as clear cut as they seem. There is a great deal of paperwork involved and if you make one mistake, the judge could dismiss your filing. If that occurs, you could be faced with legal challenges from your creditors. To keep your bankruptcy moving forward, you need to avoid the following mistakes.
Paying Creditors Before Filing
Although it might seem logical to try and pay off some of your debts in the immediate period leading up to a bankruptcy filing, it can actually hurt your case. When you file, a trustee will review your financial history. If he or she believes that payments made to certain creditors were questionable, he or she could send a formal notice requesting the return of the payment.
For instance, if you paid your parents back for a loan, the trustee could view this as an attempt to play favorites with your creditors. As a result, the trustee could ask your parents to return the funds.
If you must pay a debt before filing, talk to a bankruptcy attorney before doing so to determine if the payment could be seen as questionable.
Failing to Pay Taxes
One of the possible delays you could face in your bankruptcy case relates to your taxes. As part of the review of your financial history, the trustee will verify that you have filed your taxes over the years. If you have any tax returns that were not filed, your case could be delayed or denied.
Before filing, review all of your tax records and ensure that the taxes were filed. If there are any years missing, now is the time to file those returns. You will likely face late fees and other penalties, but your bankruptcy should not be derailed.
Transferring Assets to a Family Member
In an effort to recoup some of the funds that are owed to creditors, the trustee could seize some of your assets and liquidate them. Knowing this, some people try to transfer some of their assets to family members to hide them from the trustee. Of the many mistakes you could make in a bankruptcy, this is one of the worst.
If the trustee finds out about the transfer, he or she might believe that you were attempting to commit fraud. If that happens, not only could your bankruptcy be denied, but you could face fraud charges.
To avoid these mistakes and the many other sins that could lead to a delay or denial, work with a bankruptcy attorney like Fessenden Laumer & DeAngelo, PLLC on your filing.