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What Not to Do Before Filing For Bankruptcy

Embarking on the journey of filing for bankruptcy can be a daunting endeavor. It's a time filled with uncertainty and stress, where every decision can have profound implications for your financial future. The Law Offices of Marc G. Alster understands the complexity of your situation and is committed to guiding you through this challenging process. If you are in the Hackensack, New Jersey, area, reach out to him today for support.  

What NOT to Do Before Filing for Bankruptcy

One of the first steps in navigating this path is understanding the common pitfalls that can jeopardize a successful bankruptcy filing. It's important you know these potential and common missteps before filing. Attorney Alster will offer valuable insights and advice to help you steer clear of them. 

Don’t Use Your Retirement Account to Pay Off Debts 

When faced with mounting debts, it might seem tempting to dip into your retirement savings. However, this could end up causing more harm than good. Retirement accounts are typically exempt from bankruptcy proceedings, meaning they're safe from being seized or sold by creditors or the Trustee appointed by the Bankruptcy Court. By using these funds prematurely, you not only jeopardize your future financial security but also lose out on the financial benefits and protection that bankruptcy can provide. Moreover, you may incur additional tax liabilities and penalties for early withdrawal.  

Don’t Acquire New Debt 

Acquiring new debt right before filing for bankruptcy can complicate your case significantly. It may raise suspicions of fraudulent behavior, as it could be seen as an attempt to take unfair advantage of the bankruptcy system. It's critical to refrain from taking on new obligations and to focus instead on managing your current financial circumstances. Incurring new debt could extend the duration of your bankruptcy proceedings or even lead to the dismissal of your case.  

Don’t Move or transfer Assets 

Transferring assets before filing for bankruptcy, especially to family or friends, can be perceived as an attempt to hide them from creditors. This is considered fraudulent and could lead to severe penalties, including the dismissal of your bankruptcy case. Transparency and honesty about your financial situation are of paramount importance throughout the bankruptcy process. 

It's crucial to resist the urge to protect your assets by moving them around. Instead, let your bankruptcy attorney guide you through legal channels that can help protect your property and assets during bankruptcy proceedings. 

Do file your Federal and State Income Taxes 

Filing taxes accurately and promptly is a critical aspect of your financial responsibilities, especially when considering bankruptcy. Your tax returns play a significant role in determining your financial eligibility to file for bankruptcy protection. If you are otherwise required to file income tax returns, your failure to file your last 4 Federal and State income tax returns can lead to the dismissal of your bankruptcy case, as well as deprive you of the benefit of potentially having your Federal and State income tax debt discharged through bankruptcy. Maintaining up-to-date income tax filings is essential. Learn how your income tax situation obligations can affect your bankruptcy options, and understand how any tax-related issues, such as receipt of potential income tax refunds after filing for bankruptcy protection, might affect your case. 

Don’t Misrepresent Your Information 

Accuracy and transparency in presenting your financial information are non-negotiable during the bankruptcy process. Providing false or misleading information is not only unethical but also illegal. It can lead to your case being dismissed, loss of bankruptcy protection, and potential criminal ramifications. It's crucial to be completely forthright when disclosing your financial information to the Bankruptcy Court and your attorney. 

Don’t Selectively Pay Off Debts

Paying off certain debts over others before filing for bankruptcy can lead to complications. This practice, known as preferential treatment, may be scrutinized by the Bankruptcy Court. It's very important to consult with your attorney and follow his/her guidance as to the best way to deal with your debts before filing for bankruptcy protection. 

Don’t File Without Legal Guidance 

Filing for bankruptcy without the assistance of an experienced attorney could put your case at risk. The complexities of bankruptcy laws can be extremely challenging to navigate alone, and missteps can lead to delays, errors, or even dismissal of your case including, but not limited to, the potential loss of your home and/or other significant assets.

The Importance of Experienced Legal Guidance 

Having an experienced bankruptcy attorney by your side is invaluable when considering bankruptcy. His/her guidance can help you avoid both simple and common mistakes, as well as a catastrophe such as the loss of your home or other significant assets. To understand your options better and navigate the process smoothly you should have a consultation with at least one experienced bankruptcy practitioner who specializes in handling personal bankruptcies. An experienced attorney is equipped to provide personalized advice tailored to your unique financial situation.

Attorney Marc G. Alster brings years of experience and a deep understanding of bankruptcy laws. His expertise can help you make the best decisions for your financial future, with the goal that you meet all legal requirements and maximize the benefits of bankruptcy including, but not limited to, advising you as to the quickest and best actions you can take to rebuild your credit scores with the 3 national credit reporting agencies, Equifax, Experian and Transunion. 

Navigating Your Bankruptcy Journey with Marc G. Alster

When it comes to bankruptcy, knowledge is power, and avoiding common missteps is half the battle. With The Law Offices of Marc G. Alster by your side, you're not alone in this journey.  

Your path to a fresh financial start begins here. Contact Attorney Alster for a free consultation today and take the first step towards regaining control of your financial future. Remember, when it comes to your financial health, trust the attorney who puts your best interests at the heart of everything he does.