Bankruptcy can be a dreary experience. Should you want to rise from the ashes on top, we advise you to do a once over of what is not supposed to be done when filing for bankruptcy. Everybody wants to sneak in unscathed giving false records or hiding assets that would otherwise not aid them in the process if discovered.
No court allows you to go free if you are caught, and will definitely penalize you.
Following chapters 7 and 13 Bankruptcy, these are some prioritized, costly mistakes to avoid when filing for bankruptcy.
Lying About Your Assets and Not Consulting an Attorney
Chapter 7 bankruptcy contains a “means test,” which is essentially a requirement that you provide utmost financial transparency to determine your ability to pay creditors off. You must pass this test; otherwise, in some cases, you could be banned from filing on hidden debts ever again. One way or the other, someone will discover discrepancies or hidden assets. So, here’re three words: tell the truth.
Also, it is essential that you consult an attorney before filing for bankruptcy. No matter how well-educated, civilians cannot and should not file on their own.
Giving Assets to Family Members and Amassing Up Credit Card Debt
A big no-no, never lend cash or property, cars, jewelry, even electronics to blood relatives or friends, assuming that they will return it in the future. Also, if you give your car away to a sibling and you go file for bankruptcy is a one-way ticket to losing your car for good. List all your assets and liabilities.
If you see yourself heading down the “B” road, quit using your credit card when you know you will eventually have to file. Otherwise, all the bad credit will come back to haunt you at the time of filing.
New Debt and Not Doing Research
It is not advised to take on new debt when you have to tap into your equity to manage finances. Wise choices include letting go of any debt financing if you see yourself headed towards bankruptcy.
Knowing the rules before entering the game is pretty much the unsaid rule we all abide by. You cannot file bankruptcy for every debt. Payments like student loans, child support, tax debt, and alimony are not covered by bankruptcy. Keep yourself well-informed and consult experts before filing.
With all things said and done, the only thing left unsaid is to exercise caution. Be cautious of every step you make before you make it. Always keep experts in the loop, consult people who have filed before, do not try to hide any of your assets, and always be transparent. Go so far as consulting between experts. Opt for consistent decisions.
Good luck, and be smart!