Bankruptcy is a very critical situation for any person. Many people are still buried under the pressure of debt and loans. The pandemic has caused major losses to many businesses.
According to experts, personal bankruptcies have increased with the rise in the inflation rate. Some government regulations also contribute to this increase. Experts say personal bankruptcy can be handled easily if you take the correct measures.
This guide lists the dos and don’ts before, during, and after filing for bankruptcy. Its tips have helped create many Bankruptcy success stories for various clients. They will also help you recover from the huge burden of debt and gain financial stability in the business.
Things to do before filing for bankruptcy
If you face bankruptcy, follow the below steps before filing a bankruptcy:
- Don’t apply for bankruptcy quickly
Do not hurry to apply for bankruptcy, as it might increase your debt further. Look at the proper time and then file for bankruptcy.
- Protect your retirement account.
The next thing to do is to protect your retirement account. Do not withdraw any funds from your retirement account. You can hire an attorney to follow a proper procedure before bankruptcy.
- Do not touch assets
Some banks might ask you to provide assets. Do not make this mistake, as it might lead to criminal penalties. You must also explain every transaction to the authority with documents and papers.
- Don’t fail to file income tax returns.
Another important step is to file the taxes immediately if you have not filed for 2 years. Income tax returns will show all your asset holdings and past earnings.
Things to do while filing for bankruptcy
The process of bankruptcy includes different steps, such as:
- One of the most important things to do is to fill out all the bankruptcy forms and file them in court.
- You must gather all the important documents, such as retirement account statements, tax returns, etc.
- Meet your creditors online and arrange a meeting between them and your trustee.
- Hiring an experienced attorney will reduce the mistakes in the process of bankruptcy filings.
Things to avoid in bankruptcy filings
Certain mistakes must be avoided at all costs in bankruptcy filings, such as:
- Disclose all your assets while filing for bankruptcy. If any asset is not disclosed, it may lead to criminal penalties.
- Never transfer property or assets to your friends or family before bankruptcy.
- Do not use a retirement account to pay your remaining debts.
- Do not increase your credit amount while filing for bankruptcy
- Reveal all the true information to the authorities, as not disclosing a single fact may lead to trouble.
- Be transparent in the process of filing for bankruptcy
Steps to follow after filing for bankruptcy
Declaring bankruptcy is not the end; you can still recover your debts. Read below to know the things that you must do after filing for bankruptcy:
- You must start a savings account in the bank soon. Start saving a part of your income to cover the extra expenses of your life.
- Set a budget and spend money according to it. Do not go over the budget.
- Paying all the bills and rent for the house at the right time is necessary. Never delay paying bills, as it will still increase your burden of expenses.
- Apply for a secured credit card after bankruptcy. Use this card only to pay expenses of the last date of the month.
- It is necessary to check credit reports regularly.
Conclusion
These are the main steps to follow before, during, and after filing for bankruptcy. If you have any questions related to the bankruptcy filing, hire a lawyer or an attorney. He will assist you at every step of the bankruptcy filing process. You can make your personal and professional life better with the assistance of an attorney.