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Filing for bankruptcy is difficult and confusing enough, but your actions before submitting your petition can also have an outside influence on the outcome. In some cases, your financial moves can lead to unnecessarily losing assets or may even cause the judge to toss out your petition. If you’re thinking of going this route, here are a few mistakes to avoid.

Filing for Bankruptcy? Don’t Make These Mistakes

1. Spending Your Retirement

Many people only turn to bankruptcy after spending every available dime on their bills, including their retirement savings and 401(k). Unfortunately, this can leave you without a nest egg, in addition to incurring some serious tax penalties on the money you withdrew. Most accounts, including IRAs and 401(k)s, are usually exempt from liquidation, so you’d essentially be wasting the necessary funds to pay down debt that’s going to be liquidated anyway.

2. Racking Up New Debt

bankruptcyTo protect creditors from bankruptcy fraud, courts may not let you liquidate debt incurred up to 90 days before you file. However, costs for basic living expenses are typically allowed, so putting groceries on your credit card should be okay.

3. Trying to Hide Assets

Before filing your petition, you might be tempted to give valuables to friends or family members to protect them from liquidation. However, this is almost always a mistake, since the trustee will look back through your financial records before the bankruptcy is petitioned. Trying to hide assets from the court will not only cause your case to be dismissed, but it could also result in criminal charges.

 

If you’re drowning in debt, the legal team at Achille Law, P.C., will guide you through the process and help you reclaim your life. Their bankruptcy attorneys have a reputation throughout the Brookville, PA, area for high-quality legal advice and individualized solutions to complex financial problems. Visit their website for a closer look at their services, and call (814) 849-6701 today to get back on the road to solvency.

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