Filing for Bankruptcy? Avoid These Mistakes

Businessman showing his empty pockets

Businessman showing his empty pocketsBankruptcy may be a negative thing, but it can also be a positive experience, especially if you’re looking for some debt relief. This only makes it important to approach the process the right way, which also means knowing what you shouldn’t do before filing.

Law Office of Davis & Jones, P.C. and other bankruptcy attorneys in Salt Lake City share the mistakes to avoid when filing for bankruptcy:

Doing it on your own

Bankruptcy has legal and financial outcomes, so it is only recommended to find the right legal representation. The laws regarding bankruptcy are also complicated to understand and if things don’t go as expected, you can’t change it or ask for a do-over. It is best to hire a bankruptcy lawyer who can explain you the law the process, decide which chapter is right for you, and guide you all throughout.

Not disclosing all assets and income

In Chapter 7 bankruptcy, keep in mind that there is a “means test” that will determine your eligibility for debt relief and ability to pay off your debts. If you intentionally lie about your assets and income, it is likely that the court will dismiss your cases. You cannot simply get away with your deception, so just tell the truth.

Giving assets to friends or family

Giving away valuable assets or asking friends and relatives to keep some of your stuff with the intention of getting them back is another way of lying or cheating. You are also likely to lose a valuable possession if you give that to a loved one before filing for bankruptcy. The main takeaway: List all your assets and always tell the truth.

Taking on new debts or using your credit card

If you make credit card purchases before filing, the creditors can challenge the debt discharge. You should also know that purchases made within 90 days of filing would not be listed as bankruptcy debt. You will need to pay for those debts in full. You may also be accused of fraud.

Not doing your homework

While bankruptcy can offer some debt relief, not all debts will be wiped out at the end of the case. Some debts that are never discharged include alimony, child support, certain tax debts, and fines for breaking the law. It is best to do your homework and get the help of a lawyer to help you learn more about bankruptcy.

Desperation or intentions to help your case may only backfire. The best thing you can do is to seek the assistance of a legal professional to guide you throughout the process.