If you have found yourself in a difficult financial state, bankruptcy is definitely one solution you might consider. This is especially true if the debt is so insurmountable that it's going to be almost impossible to get out of. Of course, it's best to consult with a bankruptcy lawyer to make sure this is the best route. If you do end up choosing bankruptcy, here are four things you should not do:
- Transfer Property or a Large Amount of Money: First off, when you claim bankruptcy, the court is going to take away assets that they believe are absolutely necessary in your case. However, most of the time, people are able to keep assets like their home and car as they're seen as necessities in life and not a luxury. Attempting to hide these things, however, and transferring the title to another person is considered fraud when you file for bankruptcy and can lead to poor consequences you definitely won't want to face.
- Pay Off Creditors: If it's come to the point where you believe filing for bankruptcy is the best option for you, then there's no point in paying off creditors. This isn't going to do anything since this debt is going to be wiped away anyway once you file. Instead, you want to save that money to use it after bankruptcy to help you make better financial decisions. Coming out of bankruptcy in a responsible way is going to help improve your chances of increasing your credit score and thus being able to go about getting loans and credit cards when they are needed.
- Use Your Credit Cards: You also don't want to accumulate debt right before filing bankruptcy. Many people believe that since these things are going to be wiped away once they file, that it's okay to fully charge them. However, this is not the case since this can also be considered fraud and most likely, any large purchases you made with the credit cards are going to be taken away.
- Deposit Extra Money: Any extra money that you make outside of your normal income should not be deposited into your bank account since it can be used to pay the bankruptcy court. It also gives the appearance that you are committing fraud.
Avoiding the above four things before filing for bankruptcy is going to ensure a smoother bankruptcy process and ensure that you come out of it as strong as possible.