Common Bankruptcy Mistakes to Avoid

Bankruptcy is a complex and sometimes complicated area of the law. A great deal of people can become anxious or fearful just at the thought of filing for bankruptcy. However, it is important not to let this anxiety or fear cloud your good judgment. Here is a short list of common mistakes clients make that can be detrimental to their bankruptcy case. Be sure to avoid making any of these potentially fatal mistakes:

1. Don’t pay off certain creditors:
   
   Don’t pay off certain creditors, including your friends or family members, before you discuss your bankruptcy options with an attorney.
   
   
2. Don’t transfer property or major assets:
   
   Avoid transferring property, vehicles, snowmobiles, or other major assets with significant value immediately prior to filing for bankruptcy.
   
   
3. Don’t attempt to deceive the trustee or be untruthful about your bankruptcy filing:
   
   Lying to the trustee or to the bankruptcy court is one of the worst mistakes you can make for your case. In many situations it could cause the loss of the asset you lied about – or even worse – it could cause the dismissal of your bankruptcy case. Be truthful and disclose anything and everything you think may be an issue. Error on the side of disclosing everything.
   
   
4. Don’t borrow against your retirement fund:
   
   Almost every retirement account is fully exempt from the bankruptcy – meaning that you keep 100% of the fund. Borrowing against your retirement fund not only exposes you to significant tax penalties, but it’s taking a fully exempt asset and converting it into an potentially unprotected asset – liquid cash.