Filing for bankruptcy is a challenge even when you know exactly what you are doing and are willing to take the right steps no matter what. If you make any mistakes along the way, your situation is going to become much more complicated. Is that something you want?
There are things you can do to better your position, as well as things that will add confusion to the process, making you wonder if you truly made the right decision.
Here are three bankruptcy mistakes to avoid, as making one or more of these could sink you:
- Abusing credit before filing for bankruptcy. Do you have the sneaky idea of running up a large credit card bill before filing, as you believe this will be wiped clean?
If you make this mistake, you could be required to pay back the money at some point. There is a good chance the creditor will object to your purchases, putting you in an unenviable position moving forward.
Tip: if you think you may be filing for bankruptcy or know that this is coming, watch what you purchase with a credit card.
- Repaying others before filing. Did you know the court could consider these as preferential payments? In Chapter 7, the trustee has the right to recover the money. In Chapter 13, the trustee may not look to recover the money but instead make you repay it as part of your repayment plan.
Tip: if you owe money to family, friends, or anybody else, wait until the process is complete to repay them.
- Waiting too long or neglecting to seek legal help. Many people get so caught up in their financial situation that they don’t look into the type of help that is available to them. Did you know you can avoid every mistake if you have a bankruptcy attorney on your side? This person knows what you should and shouldn’t be doing, and can use their knowledge to steer you in the right direction.
Tip: once you decide that you may want to file for bankruptcy, consult with a qualified attorney.
There is no mistake so big that it cannot be fixed in some way, shape, or form. But there are mistakes that can make the bankruptcy process even more stressful. By avoiding the three common mistakes detailed above, you will feel better about the future.