13 Tips Before Filing Bankruptcy

Red Flags in Bankruptcy Filings
From the FBI White Collar Crime Division

  1. All creditors must be listed . This includes creditors you intend to pay after the case is filed.
  2. All property must be listed . Failure to do so is a crime - assets not listed can be seized.
  3. Tax refunds must be disclosed . Refunds may have to be turned over to the bankruptcy trustee.
  4. All business information must be listed . If you are self-employed including all of you business debts, assets, and income.
  5. All income must be reported . This includes social security payments, alimony, unemployment compensation, contributions from family and friends, and pension benefits.
  6. Intentionally incurring debt you do not intend to repay can cost the case and may be a crime.
  7. Maintain payments on secured property you wish to keep (car, house, etc.).
  8. If you misrepresent facts or lie on your bankruptcy papers, your case may be denied.
  9. Bankruptcy will stop bill collectors, tax collectors, and lawsuits . The instant the Petition is filed creditors may no longer contact you in any way. This "automatic stay" applies throughout the case and is permanent for all debts discharged at the end of the case.
  10. Bankruptcy will not stop criminal proceedings or government regulatory proceedings .
  11. Bankruptcy will not clear up a credit report . It may be reported on credit reports for 10 years.
  12. Chapter 7 cases cannot be dismissed without Court approval but Chapter 13 cases can be voluntarily dismissed at any time.
  13. Secured creditors may add Attorneys’ fees incurred by them even if you are not behind at the time the bankruptcy is filed. Most mortgages and other loan documents provide that reasonable attorney fees are allowed and will be added to the balance due on a loan.

In Short

Bankruptcy crimes are punishable by imprisonment for up to 5 years.

Bankruptcy crimes include any attempt to do any of the following:

  • Conceal property from the court or the bankruptcy trustee;
  • Knowingly make a false oath or account in order to deceive;
  • Knowingly transfer or conceal property to defraud creditors;
  • Conceal, destroy, mutilate, or falsify records or documents;
  • File or falsify your bankruptcy petition to deceive or defraud.