What can you not do during chapter 13? Chapter 13 bankruptcy rules are strict, but they are put in place to ensure that the rules of bankruptcy are followed and that all creditors get their fair share of repayment or liquidation. During your bankruptcy case, there are certain things you must not do – otherwise you risk having your case dismissed by the court or being fined heavily or even serving jail time! Check out this list of things you can’t do during Chapter 13 bankruptcy and learn what you should never do during your own bankruptcy case – because it is better to be safe than sorry.
1. Transfer/Loan Money to Someone Else
You should never transfer or loan money to someone else, including your spouse, relative or friend. This is a serious violation of the bankruptcy rules, and it is almost always illegal. The purpose of Chapter 13 bankruptcy is to get you back on your feet financially. You must file a case under your own name, without using the name of a relative or friend.
2. Change Your Will (without Legal Advice)
It is illegal to change your will during bankruptcy – even if you want to leave it to someone else. The reason you should not do this is because you could possibly be found “abandoning” the bankruptcy case by not having a valid will to pass assets onto in the case of your death. If this happens, your assets would go straight to the trustee and then be sold at public auction – with any proceeds going directly to those creditors who are left holding the bag after your death.
3. File or Appear in Court without a Lawyer
You cannot file or appear in front of the bankruptcy court without a lawyer present. If you are not sure whether you can represent yourself, then you should consult with an attorney before taking action on your own behalf. You must show up in court with your attorney and pay him or her monthly fees if you want to proceed legally. You also have to meet all of the deadlines. Failing to do so may jeopardize your case, and it is better to have an attorney present with you at all times – especially during crucial meetings such as this one!
4. Hire a Debt Relief Agency
You cannot hire a debt relief agency to work on your behalf in Chapter 13 bankruptcy. Many people often try to save money by looking for an alternate route – but unless you are doing business with the trustee directly, you will be breaking the law. Bankruptcy rules state that you cannot get debt relief assistance from anyone other than a lawyer or an attorney. This means that debt settlement companies are not allowed to help clients with filing for Chapter 13 bankruptcy or help them with any related services. To be clear, this means that no debt relief agency can provide any form of assistance during this process. You must file on your own, without hiring the help of others.
5. Evade Taxes
There are strict rules in place regarding the filing of taxes and how much you actually owe when it comes to your monthly payments. It is illegal to try and evade taxes or cheat the IRS out of their share – so you must do your homework here. You have to report all of your income accurately and pay what you legally owe. You must also report that amount on Form 22A, which is submitted along with your petition for bankruptcy. Failing to do so could result in serious consequences because the government will assess a 10% penalty on everything that you collect from Chapter 13 bankruptcy – taking a large chunk out of your payments for itself.
Chapter 13 bankruptcy is a very difficult process to go through and therefore should not be taken lightly. You must follow the rules of bankruptcy and filing deadlines, without fail. Otherwise, you will likely be found in violation of the bankruptcy court’s rules and your case could be dismissed. You would also make a serious mistake by trying to cheat the prosecutor out of their share or try to hide assets that you owe during this process.
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