Let's start with what NOT to do. These mistakes can cost you dearly, and in some cases are illegal. Some mistakes can keep you from receiving a discharge of your debts in bankruptcy, and in the worst case, could result in fraud charges being brought against you.
1. First and foremost, it is imperative that you are always completely honest and open with your bankruptcy attorney. Your attorney is ethically bound to assist you. You are also protected by the attorney-client privilege. As such, it is important that your attorney has all the information available to help you. It is important that you answer all questions completely, even if the questions (or answers) are embarrassing or make you uncomfortable. Your attorney is not there to judge you. We are there to get you the help you need.
In our experience, it is very likely that the one thing that most concerns you will not be a problem, as long as the attorney is aware of the facts from the beginning.
2. Don't hide under a rock hoping it will go away. It will not, and failure to answer lawsuits and garnishments filed against you will not help you. If you have dug yourself into a financial hole, the first thing to remember is to stop digging! Seek help from a bankruptcy attorney at the earliest possible opportunity to ensure that you are protected as much as possible.
3. Do not continue using your credit, especially for large purchases. No new accounts, no balance transfers, no misuse of existing accounts. Using credit when you know that you will not be able to repay the loans is considered fraud and can cause you more problems than it will solve.
4. Do not pay off credit card accounts. This is like throwing money away. These debts will be cleared away in most cases, and paying them off will not allow you to keep the accounts open. In most cases, your bank will know that you have filed and will close your accounts no matter what you do. Further, the amounts you pay immediately before filing will often be retrieved by the trustee and paid out to all your other creditors.
5. Do not try to transfer money or property to friends, family members, family trusts, LLC's or anyone else before filing bankruptcy. This could be considered fraud, and is easily repealed by the bankruptcy trustee.
6. Don't touch your retirement accounts. Using retirement money to pay down debt is a bad idea, especially if you are contemplating bankruptcy. Money in retirement accounts, including 401(k)s and IRAs is usually exempt, and therefore can usually be protected from creditors.
7. Do not pay off debts to friends and family members. This will not keep them out of the bankruptcy process. The trustee can go back even further to get money back form so-called "insiders. If the trustee wants to get back sums paid to family, he will sue them for it. This will cost your family even more in the long run, and will cause them even more headaches than they would otherwise endure.