*Thou Shalt Not: Delay in getting bankruptcy advice if you’re in financial trouble. Lawsuits can be filed and creditors can take advantage of how overwhelmed are most ordinary people when they’re sued. Inaction by you is good for them. Get yourself informed, pronto.
*Thou Shalt Not: Feel guilty about the predicament in which you now find yourself. It’s normal, natural to feel bad, like there is some moral defect in you that caused your economic implosion. This is more than just warm and fuzzy here: very often, debtors continued to go deeper and deeper in debt out of guilt and only making the situation worse.
Examples: Taking balance transfers on credit cards (you know the “victim”, the card to which you transfer a big balance, is not going to go quietly away);
Taking loans or outright withdrawals against retirement plan(s) to make mortgage payments, on homes which now turn out to be either losing value or at best not holding it. Those retirement loans have to be repaid. And retirement withdrawals are a double whammy: you pay taxes, and a 10% penalty right off the top. You may have just poured good money after bad money if it’s to hold onto a home. Especially if you’re already upside down in the home. Lots of people don’t realize that even in bankruptcy, you can usually keep all your retirement.
*Thou Shalt Not: Pay off personal loans to family members, close business associates, or friends.When you think you might have to file bankruptcy. These so-called “insider transactions” are “preferential transfers”, and they really irk the bankruptcy trustees. Such payments can be voided, and the relative, associate, or friend can be forced to hand over the money to the bankruptcy trustee.
*Thou Shalt Not: Take cash advances on credit cards and soon (like, within a year) expect they’ll routinely discharge in bankruptcy.
*Thou Shalt Not: Pay for elective/cosmetic surgery with a credit card, and anticipate the debt will be routinely discharged. If the creditor is paying attention, discharge of that debt could well be challenged.
*Thou Shalt Not: Travel for luxury, or buy luxury goods with a credit card, and anticipate that debt will be routinely discharged in bankruptcy.
*Thou Shalt Not: Use your credit cards for ANYTHING within ten weeks prior to filing bankruptcy (one can sometimes get away with paying for some dire necessities in reasonable amounts.)
*Thou Shalt Not: Say anything to anyone about your finances that is inconsistent with what you said, or will say, in your bankruptcy papers. Example 1: credit application overstates income, bankruptcy papers list accurate (read LESS) income. Result: if the discrepancy is discovered in the bankruptcy proceedings, big trouble. Example 2: you’re involved in litigation over something, most commonly in Family Court, regarding financial issues (support, etc.), and you list information, in writing, signed by you under penalty of perjury, that is inconsistent with the paper submitted or to be submitted to the Bankruptcy Court. People tend to be sort of casual at times, or less than thorough, about the information submitted in Bankruptcy Court. Sometimes they even…GASP! LIE!! I can’t explain why, but sloppiness and downright untruthfulness are common enough that one must be very vigilant to get the information right.