Financial burdens can easily weigh you down if you go through a period of financial hardship. For many people, the only way to escape the weight of mounting debt is by filing for bankruptcy. A bankruptcy filing can be a valuable tool that will help you find relief from your financial woes.
Here are three things that you need to keep in mind as you prepare to file for bankruptcy in the future:
1. You must file your tax returns.
In order to determine if you are eligible to file for bankruptcy, the court requires that you meet certain income standards. Your income tax returns are used to evaluate your eligibility for bankruptcy, so having your tax returns filed and up to date is critical.
If you have missed a year or have not yet filed the current year's taxes, you need to do so before you can successfully file for bankruptcy.
2. Avoid new debt.
If you are planning on filing for bankruptcy in the near future, it's important that you don't incur a lot of new debt. Some people rack up a lot of debt prior to a bankruptcy filing because they assume that all the debt will be discharged in the bankruptcy.
If the court feels that you are abusing the system, it has the power to exclude certain debts from your bankruptcy case. By avoiding any new debt as you prepare to file for bankruptcy, you ensure that your case will be as successful as possible.
3. Don't try to get rid of assets.
In addition to looking at your income, the court will also evaluate your assets as it determines if you are eligible to file for bankruptcy. If you transfer the title of ownership for a home or vehicle or liquidate a bank account prior to filing for bankruptcy, the court may assume that you are attempting to hide assets.
This could negatively affect your case, resulting in serious delays and even a dismissal of your bankruptcy. If you are selling assets in order to try and pay off valid debts, be sure that you can provide the court with documentation proving that the proceeds of a sale were utilized to repay your creditors.
Preparing to file for bankruptcy can be an arduous process. By ensuring your tax returns are up to date, avoiding new debt, and avoiding the transfer of assets prior to filing, you will be able to more successfully use a bankruptcy to improve your financial situation.
Contact a bankruptcy attorney for more information and assistance.
