Bankruptcy law is complex and its long list of requirements and no-no's can trip up even the most conscientious of us.
Below are four of the deadliest bankruptcy sins that every debtor should avoid:
- Hiding assets. Hiding assets in your bankruptcy case will not only cause your case to be dismissed, it could put you behind bars. What is considered hiding assets? Forgetting about the bank account you transferred into your uncle's name 2 months before filing bankruptcy, the house you "sold" to your mom for a dollar 6 months before bankruptcy or the safe filled with collectible gold and silver coins hidden in the basement that you failed to disclose to the bankruptcy court, are all considered hidden assets.
- Transferring assets before filing bankruptcy. Transferring assets before bankruptcy is closely related to hiding assets. Giving your daughter $50,000 right before filing bankruptcy, or selling your motorcycle to a niece for a $1000 when it's valued at $10,000 could both be considered illegal asset transfers.
- Charging up debt right before bankruptcy, or incurring debt with no intention of paying it. Going out and charging $1,000 worth of designer clothes to your credit card months or weeks before bankruptcy and then never making even one payment could make that debt non-dischargeable in bankruptcy.
- Misrepresenting your income to the bankruptcy court. Even if you have earned cash, or have a side business with income that is not easily traceable, failing to report the income to the bankruptcy court is a sin that could cause your case to be dismissed.