Your conduct and behavior before and during bankruptcy can damage or even be fatal to your case. On the other hand, understanding your rights and responsibilities can minimize your risks. Consult with a bankruptcy lawyer to help you navigate the pitfalls commonly encountered by those seeking bankruptcy protection.
- DO take bankruptcy seriously. It is a privilege and courts take a very dim view of abuse of that right.
- DO be honest. It is against the law to lie in bankruptcy proceedings. You are sacrificing a small portion of your privacy to get a discharge of your debts. If you lie on your petition, or if you conceal assets, you could get in very serious trouble.
- DO be honest and forthcoming with your attorney. Even if it is embarrassing, even if it makes you look like an idiot or a crook, it is better if your attorney knows. Giving your attorney insufficient information is like hiring a chauffeur and not telling him or her that your brakes don’t work.
- DO give your attorney EVERYTHING in your relevant financial files, again even if it is embarrassing or incriminating. If you have the document, the odds are someone else does too.
- DO inform your bankruptcy attorney EVERYONE you owe money to. This includes family members and friends.
- DO continue making payments on vehicles which you intend to keep. Creditors secured by a car or truck can usually repossess the vehicle without notice to you anytime you are in default in your payments.
- DO adjust the amount withheld from your pay for taxes to get to as close as possible to getting no refund or owing. You want to be as close to zero as possible. A tax refund is an asset in Chapter 7, and your tax withholding can affect plan payments in Chapter 13. Caution: Don’t reduce the withholding for tax so much that you will have a big tax bill to pay!
- DO close or keep a minimal amount in your checking and saving accounts at any banks where you also have a credit card or line of credit. If you stop paying on your credit card or line of credit, the bank may go into your checking and savings account and pay your credit card/line of credit.