If you’re struggling financially, you may be considering all your options. Bankruptcy may be one of them.
Hundreds of thousands of people in the United States opt for bankruptcy every year. Bankruptcy can help erase your debts and give you the financial freedom you desire.
However, bankruptcy is not an easy procedure. There are a lot of laws that must be followed, and they vary by state. It’s not always clear which assets are exempt from bankruptcy. Which debts can be discharged?
One little mistake can derail the entire bankruptcy process. Don’t let this happen to you. Here are some things to avoid doing when filing for bankruptcy.
Not Hiring a Lawyer
It can be tempting to try to do everything yourself so you can avoid hiring a lawyer and save money, but this is not a good idea. Bankruptcy law is too complicated for the average person to understand. Bankruptcy lawyers are well-versed in all the nuances of the law. They can ensure that you file the correct type of bankruptcy, fill out all the paperwork, and meet all of the court’s requirements. They can also help you understand whether you’ll be able to keep your assets, the tax consequences of filing, and whether you should continue to pay your creditors.
Not Doing Your Research
Bankruptcy is not some sort of miracle transaction. It cannot handle all your financial woes. Make sure you understand what can and cannot be discharged in bankruptcy because not all debts are eligible. There are several types of debt that cannot be discharged, including student loans, alimony, child support, and tax debt.
Lying About Your Assets
When filing for bankruptcy, you are required to disclose all your assets and debts. However, you may not want the court to know about your car or savings account, so you attempt to hide it. This is a bad idea. There are severe penalties involved for lying. A bankruptcy trustee will have access to your financial records, so they know what you have. If they find hidden assets and income, your case can be dismissed. You could even be banned from filing bankruptcy on those debts ever again. You can avoid all this by simply being honest.
Running Up Debt
If you’re filing for bankruptcy, you might as well run up your credit card debt, right? Wrong! This is a type of fraud that will likely backfire. Running up your balance right before filing for bankruptcy will look very suspicious. The creditor may refuse to dismiss the balance, and you will be on the hook for paying up.
Choose the Correct Type for your Situation
Choosing the wrong type of bankruptcy is another pitfall. Individuals typically file under Chapter 7 or Chapter 13, and each has distinct eligibility requirements and implications. For instance, Chapter 7 involves liquidating non-exempt assets to pay creditors, while Chapter 13 establishes a repayment plan. Selecting the wrong option could result in missed benefits or unintended financial strain. Consulting with a professional can help determine the most appropriate course for your circumstances.
Comply with the Rules After Filing
Lastly, many people underestimate the importance of complying with post-filing obligations. Whether it’s attending mandatory credit counseling sessions, completing paperwork on time, or adhering to a repayment plan, failure to meet these requirements can derail the process. Staying organized and proactive ensures you meet all deadlines and obligations, ultimately improving your chances of a successful discharge.
By understanding and avoiding these common mistakes, you can navigate bankruptcy with greater confidence and work toward rebuilding a stable financial future.
If you are considering filing for bankruptcy, you don’t have to go through the process alone. Adam Freiman is here to help you navigate bankruptcy with ease.
Adam has over 25 years of law experience working on every case type, from bankruptcy to criminal cases. He was also one of the founders of one of Baltimore’s most touted bankruptcy law firms. However, through his years of experience, Adam learned that bigger doesn’t mean better. Instead of making clients jump through hoops, talking to various paralegals, and mudding the communication waters, he likes to take a one-on-one approach.
If you choose Adam M. Freiman as your bankruptcy lawyer, you can trust that he will represent you personally. Contact us today to learn more about how Adam can help you with your bankruptcy case!
