3 Tips For Handling Your Financing Leading Up To A Bankruptcy Filing

If you made mistakes as a teenager that could potentially hurt your career as an adult, learn from my family's experience on how to help with that situation.

3 Tips For Handling Your Financing Leading Up To A Bankruptcy Filing

28 April 2017
 Categories: Law, Blog

If you think that you want to file for bankruptcy in the near future, you need to make sure that you handle your finances correctly not just when you file for bankruptcy, but in the time period leading up to when you file as well.

#1 File Your Taxes

One of the most important things you can do is file your taxes. You can't avoid paying federal or state taxes just by avoiding filing your taxes. Even if you are not able to pay your taxes, you still need to complete and file your state and federal taxes or apply for an extension on your taxes. Failing to file your taxes will result in additional fees and consequences.

Make sure that you get an accountant to help you file your taxes, and try to pay as much as you can on your tax bill. Don't worry about it if you can't pay your entire tax bill, just make sure that you file your taxes on time or apply for an extension. Not filing your taxes will make it look like you don't take your finances seriously when you go through bankruptcy court and it will be hard to assess all of your debt if you have not filed your taxes.

#2 Get New Debt

Second, you do not want to add to your debt in the months leading up to your bankruptcy filing. That means that you should not buy a new car or take out a new credit card before you file for bankruptcy. If you incur a lot of new debt within one to three months before your bankruptcy filing, it may look to the courts like you purposely took out more debt than you knew you could handle just because you were hoping to get it dismissed in court.

This is actually can be seen by the courts as a form of fraud and can result in serious consequences for you and can lead to your entire case getting thrown out.

#3 Paying Down Specific Debt

It may seem counterintuitive, but the courts do not look well on you prioritizing one payment over another. For example, if you have five credit cards and a car payment, and you only make the car payment and don't even make the minimum payment on the credit cards, that will look like you are favoring one company that you owe debt to over the others.

If you completely pay off one debt while not making any payments at all on other debts you owe, this can hurt you. The courts can force whomever you paid the money to return it, and then they can take that money and use it in a more "fair" manner to pay off all of your debtors, so it is best to keep your payments consistent. 

About Me
teenage mistakes that could ruin adult careers

My son has had the goal of becoming an attorney since he was about 14 years old. Unfortunately, he made a very poor decision with a group of friends when he was 16 that put his future plans in jeopardy. When my son told me what had happened and we received the citation, I knew that we had to hire an attorney to help him through this. I could not see how a small incident such as this should hurt his chances for success when he is an adult. Thankfully, things worked out for us, but it was a long journey which you can follow on our blog.