Bankruptcy Lawyer Bryan W. Stone answers the question: “What are the pros and cons of bankruptcy?”
Filing bankruptcy can be the solution to your financial worries. If you are looking to get a fresh start and regain financial control, filing bankruptcy in Charlotte, North Carolina, may be exactly what you need.
However, unfortunately, many debtors make decisions before bankruptcy that can negatively impact them in the long term. Consulting with a Charlotte bankruptcy attorney can help prevent these unnecessary and avoidable mistakes.
The following are the top five mistakes that North Carolina debtors make prior to filing for bankruptcy.
Mistake #1: Acquiring New Debt
If you are considering the advantages and disadvantages of filing bankruptcy, chances are you are struggling to pay bills.
As bills keep mounting and debt collectors keep blowing up your phone, it can be tempting to take out a personal loan to cover some or all of the costs. However, acquiring new debt within 12 weeks of filing for bankruptcy could get you in trouble. Creditors may accuse you of fraud, arguing that you obtained the new debt because you knew it would be discharged through bankruptcy.
If you file for bankruptcy not long after acquiring new debt, the creditor may contest your bankruptcy at the 341 Meeting of Creditors.
Mistake #2: Moving or Transferring Assets
When filing for bankruptcy, debtors are required to list all of their assets, including property and cash. Moving or transferring any of your assets into someone else’s name shortly before filing for bankruptcy may make it look as if you are hiding assets and engaging in bankruptcy fraud.
It is only acceptable to sell or transfer property if the proceedings will go toward paying your current debts or paying living expenses. Any assets that you move or transfer prior to bankruptcy will be reviewed and scrutinized by the bankruptcy court.
Mistake #3: Avoiding Income Taxes
If your current debts seem too overwhelming, you may feel like you cannot afford to pay income taxes anymore. However, one of the core requirements of filing for bankruptcy in North Carolina is being current on income taxes. When filing bankruptcy, you may be ordered to pay the government if you have been avoiding income taxes.
Mistake #4: Providing Inaccurate Information
Typically, debtors are asked to provide tons of information when filing for Chapter 13 bankruptcy or any other type of bankruptcy. Providing accurate information is of great importance when filling out forms and filing documents. Otherwise, you may face charges of fraud on top of penalties, fines, and even the risk of incarceration.
Provide the most accurate facts about your assets, income, and debts, as you will be asked to make statements under oath. If you are unsure how to answer, talk to a Charlotte bankruptcy attorney to discuss your particular situation.
Mistake #5: Using Retirement Funds for Living Expenses or Paying Debts
When paying bills becomes challenging, it might not seem like a big deal to use your retirement savings to pay creditors. However, doing so is a huge mistake because you will likely face tax penalties and lose the money that you will need later in life.
In most cases, debtors are able to keep their retirement accounts, including 401(k) plans, pensions, and IRAs, through bankruptcy. A skilled bankruptcy lawyer can help save all or some of your retirement savings with both Chapter 13 and Chapter 7 bankruptcy.
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