If you decide that you want to file for bankruptcy, you need to be careful about how you handle your money. The bankruptcy court is not just going to look at the debt that you have; they are going to look at your actions in the months leading up to filing for bankruptcy. The time period varies from jurisdiction to jurisdiction, but in general, the courts will look closely at your financial activity in the three months leading up to you filing for bankruptcy. The courts work hard to ensure that the bankruptcy system is not exploited and will examine your financial behavior.
1. Leave Your Retirement Funds Alone
Do not try to tap into your retirement funds for money to live off of or for money to pay off creditors. Your retirement funds are one type of money is protected during bankruptcy proceedings. Since that money is protected, it doesn't make sense to use it to try to pay off debt or get a creditor off your back.
2. Stick to Your Normal Transactions
Next, you are going to want to stick to your normal transactions. Go about paying your household bills, food, and gas like you normally do. If you usually buy everything with a credit card and pay it off when you get paid every month, it is okay to keep doing that. When the bankruptcy court looks at your bank statements, they are going to be looking for consistent behavior, so sticking to what you normally do is just fine.
If you make any changes to your spending, any change you make should be moving towards saving more money and making smarter money decisions.
3. Let Your Creditors Know
If you have credits that are harassing you for payment, let them know that you are in the process of hiring an attorney and filing for bankruptcy. If a creditor knows that you are moving towards bankruptcy, they may stop moving forward with aggressive actions against you, such as garnishing wages or seizing an asset. This can stop that action and allow you to deal with the creditors in court. Letting your creditors know that you are planning on going through with bankruptcy is actually a good thing.
4. Keep Your Payments Consistent
Keep the amounts that you are paying your creditors consistent. If you are just making the minimum payment, continue to do so until your bankruptcy papers are filed in the court. Don't try to pay off any particular creditor or fail to pay any particular creditor. Continue to pay in the same manner that you have been.
If you are planning on filing for bankruptcy, don't tape into your retirement fund, that money will be protected when you go court. Stick to your normal spending habits and keep up with your payments until you file for bankruptcy. Let your creditors know that you are taking bankruptcy action so that they will stop pursuing you.
For more information, contact a company like Greg Dunn Bankruptcy Attorney.