Things to do (or not do) if you’re considering bankruptcy

Don’t raid your retirement

This may be the top mistake people make. If there’s a possibility that you’ll be filing bankruptcy, don’t borrow money from your retirement accounts. Most people can keep all of their retirement savings in bankruptcy, so it almost never makes sense to raid your IRA or 401k before filing.

Don’t sell or give away assets

Selling assets before bankruptcy can complicate your bankruptcy, not just for you, but for the person you sold it to. Selling or giving away things before bankruptcy is a sure way to drag other people into the case, and it should only be done after talking to a lawyer.

Don’t pay back friends or family

Repaying debts to family or friends is another way to drag someone else into your bankruptcy. Payments to “insiders” in the year before filing can be set aside, which means your bankruptcy trustee might end up suing your friend or family member. Avoid this hassle by stopping payment on all your debts, even ones to friends and family.

Do get a bankruptcy attorney involved early

Your bankruptcy attorney will be able to fix most issues that come up. But the sooner you get him or her involved, the easier it will be to deal with any problems. Talking to a bankruptcy lawyer early in the process will ensure that your bankruptcy goes smoothly and that you keep as much of your money and property as possible.

Do keep good records

Your bankruptcy attorney will ask you for lots of paperwork—paystubs, bank statements, tax returns, business records. Make sure you’re keeping good records, preferably digitally, to make the bankruptcy process go as smoothly as possible. And try not to handle your finances in cash—dealing with large amounts of untraceable cash will make your bankruptcy trustee suspicious and could complicate your case.