Filing for Bankruptcy: Common Pitfalls to Avoid

Filing for bankruptcy is a genuine debt relief solution. Before attempting anything, however, you should know that the process is not as straightforward as you might think. Since making mistakes can leave you in a tight spot, you should not employ a trial and error approach when filing. What are some of the mistakes to avoid?

Filing Under the Wrong Chapter

Assuming that any chapter is ideal for you would be a bad decision. If you file under Chapter 13 instead of Chapter 7, chances of a setback will be high. It is true that amending an incorrect petition is still possible. However, it will require time that you might not have. It is advisable to research conclusively to know the type of bankruptcy to file for. If you would like to protect some of your assets, Chapter 7 bankruptcy would work for you. Chapter 13 involves a debtor repaying the funds. It takes longer than Chapter 7.

Giving False Information

Providing false information, especially about your assets and income can see your case dismissed. Do not assume that leaving out your income and assets improves your chances of approval. Since a bankruptcy trustee will look into your financial records, any false information you provide will not go unnoticed. In addition to having your application denied, misrepresentation of information can subject you to criminal prosecution. If you have any joint debt, you should include it in the filing, too. You should also not transfer, sell, or hide your assets ahead of filing for bankruptcy.

Racking Up New Debts

Incurring more debts 60 to 90 days before filing would most likely see your creditors contest the request to discharge. This is because they can claim that you took the money without intending to repay it. Understand that using all available credit on your credit card prior to filing is also not an option. If credit card companies can prove that you did the same, they can use it to challenge the request to forgive some or all of your debts.

Ignoring Imminent Collection Actions

Your creditors will still need to collect any repayments as agreed until you file for bankruptcy. If you ignore the same, chances are that creditors will seek legal judgments against you. They might also repossess your vehicle, garnish your wages, and foreclose on your home. While creditors will have to return any property they seize after you have filed for bankruptcy, the process will be taxing and expensive.

Failure to Seek Legal Counsel

Frustrated man calculating bills and expenses

It is true that you will need to pay a lawyer. However, since their advice will help you navigate the complex field of bankruptcy, they will be worth it. Since they are familiar with the process, they will help you save the time and money that you are likely to waste filing and re-filing. You should be careful to work with a reliable debt consolidation attorney in Salt Lake City.

Understand that filing for bankruptcy will only make sense if you do it in time. Waiting too long can see you lose some of the assets that you would like to protect. You should also factor in the time required to obtain a bankruptcy counseling certificate.

Spread the love:
Scroll to Top