Bankruptcy is never an option or one that anybody turns to readily. Unfortunately, the prospect of turning towards bankruptcy for help is more common today than ever. For some, though, this option is scary. The desperate measures some people employ to delay filing often times make their situation worse. While the feelings of anxiety maybe warranted, the pitfalls are not.
A common Bankruptcy mistake is to cash out retirement funds, like IRA’s or 401(k) plans. In most cases of bankruptcy, retirement assets are protected. If you cash out these funds, not only will you be subject to taxes and penalties on the money, but they will no longer be legally exempt, and you may lose them entirely.
Retirement funds may be exempt from bankruptcy liquidations
A bankruptcy doesn’t have to put your financial future in jeopardy. Even if you are forced to liquidate other monetary assets, a qualified bankruptcy attorney can tell you if your retirement savings are safe. It’s important that you understand your rights when declaring bankruptcy in New York.
Avoid the debt management trap
Many debt management companies profit off debtors by misleading them about the difficulty of handling debt, and some may even neglect to pay your structured payments, and leave you in a worse situation than you were when you started. Always employ legal counsel when working with debt management companies, and avoid falling into this big pitfall.
Protect yourself from predatory companies like these by working with experienced bankruptcy attorneys during each step of the bankruptcy process. You might need help liquidating assets and structuring payments, but legal professionals will have your best interests at heart because they are invested in making sure that you succeed.
What transfers are legal, and which are fraudulent?
Some transfers in a bankruptcy case are legal, such in the case of normal business transactions. Many, however, are considered fraudulent. These may include trying to hide assets by giving them to friends or family, or by selling items at a much lower cost to people close to you. This activity is illegal, and it’s a common temptation that gets many people who are filing bankruptcy into trouble.
Work closely with your bankruptcy lawyer during the process to ensure that your transfers are legal. If you are accused of bankruptcy fraud, you should find legal representation immediately.
Avoiding credit scams
Predatory lenders, credit scams, banks, and lending agencies may be causing you many of your financial woes. Work with your attorney to ensure that they are using fair practices while you work through the bankruptcy process.