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Things Not To Do

Common mistakes to avoid

Things Not To Do

Below is a list of things not to do before consulting a bankruptcy attorney as people often take these actions thinking it is the right thing to do but in actuality, it can disqualify you for bankruptcy or financially hurt you when it does not have to.

Raid retirement funds

IRAs, 401k, 403b and all other retirement accounts are protected. They can not be taken to pay your debts. Nothing makes me sadder than when someone comes in after they took their retirement monies, paid off some of their debts and now are filing for bankruptcy when all along they could discharge their debt and keep the retirement funds.

Give money (or anything) to anyone

One thing bankruptcy trustees look for is transfers of money or property to others in an attempt to get it back. So when you get your tax refund do not pay it to friends, family members or anyone else you feel you need to pay back. By proper bankruptcy planning, you can keep the money and pay them back after filing. Pay them before and you can find your trustee attempting to claw back the money from the ones you care about.

Give cars back to lenders

If you can not afford your car payment, do not just return the car. Consult with a bankruptcy attorney first as there are ways to keep the car and possibly reduce the payment. Additionally your ability to qualify for bankruptcy could be dependent on keeping the car through the process and then returning it afterwards.

Avoid Process Servers

If someone is trying to serve you with legal papers, ACCEPT THEM, DO NOT HIDE. Hiding or refusing service does not make the situation go away. Once you refuse, the process server can perform Nail & Mail service where they tape a copy to your door and mail you a copy. Quite often when this happens you never actually receive the papers. At that point, the people suing you will obtain a default judgment telling the court they gave it to you, you did not respond and they should win. Undoing a default judgment can be a costly and time consuming endeavor so do not be scared, take the papers!

Take cash out of the bank

During bankruptcy, your trustee may ask to see your bank account. Taking money out of the bank to “protect” it may lead to more questions that can be avoided by prudent asset planning. So before putting the money in your mattress, contact a bankruptcy attorney.

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