Once an individual's financial situation has reached a critical level, the decision to seek bankruptcy protection is often simplified. Doing so can lead to the elimination of many forms of consumer debt, and help an Arkansas resident regain his or her financial footing. When preparing to file, it is important to avoid certain acts, any of which can complicate the bankruptcy process.
One of the most important things to avoid in the months leading up to a bankruptcy filing is taking on new debt. Do not make big purchases with the assumption that those debts will be cancelled out during bankruptcy. Creditors will review the purchasing history of debtors who seek bankruptcy protection and can challenge the discharge of those debts. In some cases, seeking discharge of newly acquired debt can be considered fraud.
It is also important to avoid making any unusual financial transactions in the time frame immediately preceding a bankruptcy filing. This includes transferring money or other assets to friends and family members in the belief that doing so will "shield" those assets from the bankruptcy process. When the bankruptcy court learns of such activities, the result can be a lawsuit aimed at reclaiming those assets.
Filing for personal bankruptcy is a solid financial move. It is also a choice that can greatly improve an individual's financial future and provide the chance to rebuild a solid foundation for future prosperity. In seeking such protection, however, Arkansas residents must take steps to avoid complicating matters by engaging in the activities mentioned above.
Source: The Huffington Post, "Here Is Exactly Why People Who File Bankruptcy Are Smart", Steve Rhode, June 30, 2015