Filing for bankruptcy is a fresh start, but it also comes with responsibilities. Think of it like planting a new garden. You need to nurture it and avoid mistakes that could ruin your hard work. After filing for bankruptcy, there are certain actions you must avoid to ensure your case proceeds smoothly and you get the relief you need.

Do Not Hide or Sell Assets

Hiding assets or selling them during bankruptcy is like breaking the rules in a game. The court requires full transparency. Selling property or transferring assets to someone else to keep them out of the process can lead to serious consequences. The court might dismiss your case, deny your discharge, or even pursue fraud charges. Be upfront about everything you own and let the process work as it should.

Avoid Taking On New Debt

It can be tempting to apply for new credit after filing, especially if you’re struggling to make ends meet. However, this can harm your case. Courts and trustees look at your financial activity during the process. Taking on new debt without approval could lead to complications or even dismissal. Bankruptcy is a time to focus on clearing what you owe, not adding more to the pile.

Do Not Miss Required Payments

For Chapter 13 bankruptcy, you must follow a repayment plan. Missing payments is like forgetting to water your new garden. It can cause everything to fall apart. If you fail to make payments on time, the court may dismiss your case. In Chapter 7, you might still have to pay certain debts, like child support or secured debts, to keep specific assets. Stay consistent and prioritize your payments.

Avoid Large Financial Transactions

Making large purchases or financial transactions can raise red flags. Buying luxury items or transferring money right after filing might seem suspicious. The trustee could question your intent and investigate further. Focus on essential expenses and stick to your budget. This ensures the process remains straightforward and free of complications.

Do Not Ignore Trustee Requests

The bankruptcy trustee oversees your case and ensures everything is done correctly. Ignoring their requests or failing to provide information can stall your case. If the trustee asks for documents, like proof of income or updated bank statements, provide them promptly. Think of the trustee as someone guiding you through the process. Cooperation makes everything smoother.

Avoid Neglecting Your Financial Education

After filing, you are required to complete a debtor education course. Skipping this step means you won’t receive a discharge of your debts. The course helps you learn how to manage your finances better and avoid falling into debt again. It’s a small but crucial step toward rebuilding your financial future. Don’t overlook it.

Do Not Act Recklessly With Exempt Assets

Bankruptcy laws allow you to keep certain exempt assets, like a portion of your income, retirement accounts, or a primary vehicle. However, acting carelessly with these assets can cause problems. For example, if you receive a lump sum payment from a lawsuit or inheritance, it may need to go toward your debts. Use exempt assets wisely and only for essentials.

Avoid Changing Jobs Without Planning

Changing jobs during bankruptcy isn’t always a problem, but it can affect your case. For Chapter 13, your repayment plan depends on your income. A sudden drop in income could make it harder to stick to the plan. A significant increase might lead to changes in how much you are required to pay. Always consider how a job change might impact your situation.

Do Not Ignore Your Credit Report

After bankruptcy, your credit report might still show incorrect or outdated information. Ignoring this can hurt your ability to rebuild credit. Check your report regularly to ensure discharged debts are properly marked. Disputing errors is simple and can help you move forward faster.

Bankruptcy offers a chance to rebuild, but knowing what not to do is just as important as knowing the steps to take. Protect your fresh start by staying informed and following the rules. Learn more about how to navigate bankruptcy successfully by visiting Sims Bankruptcy Law, PLLC. Get the guidance you need to secure your financial future today.