If you want to get out from under your debt burden, filing for bankruptcy protection is a wise move. You want the process to go smoothly with no problems to impede success.
To help you achieve that goal, here are five common mistakes to avoid.
1. Incomplete creditor list
Be careful not to forget or exclude a creditor from your list. The law requires you to include every creditor when you file for bankruptcy.
2. Not revealing all assets
You have probably heard of spouses hiding assets in divorce, but do not follow their lead. Not revealing a second bank account or transferring money to a friend or relative to hold for you during the bankruptcy process is against the law. This amounts to bankruptcy fraud, and you could face fines and even a prison term.
3. Making repayment to family
You may wish to repay a loan from a family member before filing bankruptcy. However, the trustee may see this as a “preferred payment” and disallow it. Your family member may have to pay that money to the trustee for inclusion in your bankruptcy.
4. Enjoying a big spending spree
Do not go on a shopping binge right before you file bankruptcy thinking it will make no difference. Running up charges on your credit cards at the eleventh hour is not a good idea because the purchases you make may not be dischargeable. Instead, discontinue using your credit cards.
5. Delaying your filing
Once you have decided to file for bankruptcy, do not delay. Putting it off will only create more problems for you because your debt will snowball. You may face collection calls and wage garnishment over your delinquent accounts, but bankruptcy will put a stop to all that.
Be sure to increase your opportunity for having a smooth, uneventful bankruptcy experience by exploring your legal options. Remember that you do not have to face bankruptcy alone. Accepting guidance will help you avoid mistakes and set you on the path to a debt-free future.