Filing for bankruptcy comes with a set of rules that you may or may not be prepared for. There are a number of things that you have to keep in mind. It’s tough to remember all the ins and out of bankruptcy, especially when you consider the emotional distress that it brings on you and your family. Still, there are a few rules that you have to keep in mind before you make your filing official. These rules are simple, but important nonetheless.
A lot of people get the same bright idea when they know their next step is filing for bankruptcy. They decide they are going to run up money on the credit card. They figure “why not? It will all be forgiven in a court of law soon enough.” The bad news for these financial wizards is that there is no forgiveness for purchases made within 90 days of filing. Whoever wrote this law took into account the amount of people who would try this little scam on the system.
Many people think that because they are surrendering to their bankruptcy demons that they are going to lose their retirement account. The last thing they want to do is see a court take it away to pay down debt. The urge to liquefy it is a foolish urge at best. The best thing you can do is keep it there. In most cases the government will not go after it. Cashing it out will cause a huge loss in penalties and early taxing. Do yourself a favor and keep it right where it is. Your filing for bankruptcy must be followed by a set of rules otherwise getting relief could turn into its own nightmare.