What Not to Do Before Filing for Bankruptcy
July 6, 2021
According to statistics from The American Bankruptcy Institute, there were 16,517 total business and non-business bankruptcy filings in Virginia in 2020. When experiencing financial hardship, filing for bankruptcy may be a potential solution to remedy your financial situation. With so much misinformation out there, someone thinking about bankruptcy can easily make irreversible mistakes without detailed counsel or experienced representation. If you're considering filing for bankruptcy, it's important you consult with an experienced Virginia bankruptcy attorney for proper guidance.
At Vivona Pandurangi, PLC, we're committed to offering comprehensive legal guidance and advocacy to clients in bankruptcy-related matters. Our attorneys are available to evaluate your situation and help you understand your legal options. As your legal counsel, we will educate you about what to do and what not to do before filing for bankruptcy, and guide you through the entire bankruptcy process from start to finish. We are proud to represent clients throughout Falls Church, Arlington, Manassa, Alexandria, and Fairfax County, Virginia.
What NOT to Do Before Filing for Bankruptcy
There are many complexities involved in filing for bankruptcy. Understanding what to do and the things to avoid before filing is crucial to make your bankruptcy proceedings more manageable and mitigate potential issues. If you're thinking about filing for bankruptcy, here are some of the things to avoid:
Don't Use Your Retirement Account to Pay Off Debts
One of the biggest mistakes people often make before filing for bankruptcy is withdrawing their retirement funds to settle their debts. Unknown to you, bankruptcy can help wipe out some of these debts, so before paying off your bills using your retirement funds, consult with your bankruptcy attorney. Even in bankruptcy, you can still protect most retirement funds.
Don't Acquire New Debt
Avoid acquiring new debt within 70 to 90 days prior to filing bankruptcy. Creditors may object to your bankruptcy discharge by filing an "adversary proceeding" and arguing that you took out a loan without any intention of repaying. This may be considered as "presumptive fraud," and such debt may be classified as nondischargeable. Even if you need to take out cash advances or new loans, ensure that it is for life necessities, such as food, clothing, and utilities.
Don't Move Assets
Some people may be tempted to sell, hide, or transfer assets to family members and friends for safekeeping before filing for bankruptcy. Don’t do this! Moving assets prior to filing for bankruptcy may result in criminal penalties. In fact, your bankruptcy discharge may be denied entirely.
Don't Fail to File Your Taxes
Your tax returns are used to determine your current and past earnings and property holdings. Especially when filing for a Chapter 13 repayment plan, completing your bankruptcy paperwork requires your tax returns. If you fail to file your income tax returns, you may run into problems during your bankruptcy proceedings.
Don't Misrepresent Your Information
In your bankruptcy paperwork, you will need to provide complete, accurate, and honest information about your finances, assets, debt, income, and expenditures. Intentionally misrepresenting or providing inaccurate information can result in criminal penalties, including fines and potential prison sentences.
Don't File Without Legal Guidance
Finally, do not file for bankruptcy without experienced legal guidance. A knowledgeable bankruptcy attorney can help determine the chapter of bankruptcy that best fits your unique financial situation and whether it's the right time for you to file.
Let Our Team at Vivona Pandurangi, PLC Help
Filing for bankruptcy in Virginia involves complicated procedures. Determining the bankruptcy option that suits your personal financial situation and navigating the entire bankruptcy process requires knowledgeable guidance. When considering filing for bankruptcy, it is important that you consult with an experienced Virginia bankruptcy attorney for detailed guidance and to help you navigate key decisions in the bankruptcy process.
At Vivona Pandurangi, PLC, we have the experience and resources to guide and assist clients in the legal matters of bankruptcy. As your legal counsel, we can review your financial situation, enlighten you about your available bankruptcy options, and determine the right bankruptcy for you. Also, we will educate you about what to avoid before filing, craft an ideal solution to protect your assets, and help you make informed financial decisions moving forward. Our experienced team at Vivona Pandurangi, PLC can guide you through every step of your bankruptcy proceedings and help you make critical decisions.
Contact us at Vivona Pandurangi, PLC, today to schedule a one-on-one case assessment with our knowledgeable bankruptcy attorneys. Our team can offer you the detailed legal counsel, advocacy, and support you need in your financial situation. We proudly represent clients throughout Falls Church, Arlington, Manassa, Alexandria, and Fairfax County, Virginia.