What not to do Before Filing Bankruptcy in Atlanta, Georgia
Bankruptcy can be a help for families who are struggling with overwhelming credit card, medical or other debt. However, if you are considering filing bankruptcy in Atlanta, Georgia, consider the following to ensure that your bankruptcy case proceeds smoothly and successfully and that you are able to protect and keep all of your property in bankruptcy.
The two types of bankruptcy
There are two types of bankruptcy available to individuals–Chapter 7 and Chapter 13. Chapter 7 is a liquidation bankruptcy, where your assets are sold to pay your debtors and most of the rest of your debts are wiped out. Some things are excluded from liquidation, such as your primary home, one car and your personal possessions. Chapter 13 is a reorganization bankruptcy. All of your assets are protected and you make a monthly payment to a court-appointed trustee based on a reorganization plan that you file with the court. You have one to five years to complete your plan.
Things you shouldn’t do before filing bankruptcy
Both types of bankruptcy can help you get a fresh start. However, there are several things that you shouldn’t do as you get ready to file the paperwork for your bankruptcy case.
1. Take funds out of your retirement accounts.
Most retirement accounts are protected in both Chapter 7 and Chapter 13 bankruptcy. It’s even a mistake to withdraw funds from your retirement account to pay a debt that could be wiped out in the bankruptcy process. One thing you can be sure of, however, is that draining your 401k and IRA accounts could cause you to end up with a huge tax bill the next time tax day rolls around.
2. Make false statements on your bankruptcy paperwork.
Disclosing all of your financial information can be embarrassing. We understand that. However, making false statements on your bankruptcy paperwork is a crime. Make this mistake and you can face hefty fines and even jail time. In addition, your bankruptcy case won’t go forward, so you’ll end up in a worse position than you were in originally.
3. Amass a ton of new debt
Taking out loans and running up credit card bills in the 60 to 90 days before you file Chapter 7 bankruptcy can also get you into trouble. The debtor may fight the discharge of your debt, arguing (perhaps justifiably) that you never intended to pay back the loan or charges and that you committed fraud. Charges and loans for things like medical bills, housing, food and clothing are usually excluded from this type of situation.
4. Fail to file your tax returns
In addition to the usual IRS penalties and fines for not filing your tax returns on time, failure to file your return can quickly derail your Chapter 13 bankruptcy reorganization plan. The court uses your returns to access your past and current earnings as well as your tax obligation (which has a priority status in bankruptcy court). Without your returns, there’s no way for the court to determine these amounts and the court will likely halt your bankruptcy.
5. Moving money or assets out of your name
Transferring assets before you file bankruptcy is also considered fraud, even if you do it innocently. This includes things like taking your name off of a deed or a business license, giving a car to your child or depositing money of yours into your mother’s bank account.
6. Depositing unusual amounts of money into your accounts
The 60 to 90 days before bankruptcy is a bad time to do your friends or family favors, like making large purchases for them on your credit card and having them reimburse you in cash. Similarly, it’s a bad idea to pay a bill for a friend without a checking account with him giving you the cash and you writing a check. It will be difficult, if not impossible, to show the court that these deposits weren’t your funds.
Bankruptcy can be scary and confusing. It can also be a time of renewal and give you a new, debt-free start. To make the most of the bankruptcy process and to help avoid mistakes, both before and after your Georgia bankruptcy, contact the law offices of Clark and Washington. We are Georgia’s largest bankruptcy filer and have been helping people like you get rid of crushing debts since 1983.