There’s a lot to pay attention to if you’re getting ready to file for Bankruptcy. Ultimately, you want to make sure that you’re doing everything by the book so as to avoid any and all risks you may be taking. Filing for Bankruptcy is designed to give you a fresh start, so the last thing you want to do is file incorrectly or do something unknowingly that will cause more issues for you down the line. Here are the top five things to avoid when filing for bankruptcy:
1. Paying off “Favored” Creditors
a. The term favored applies to any creditor you may pay before filing for Bankruptcy. Often times, these are people you may know, friends or family, but sometimes not. For whatever reason you may choose to pay off a particular debt, that creditor is considered “favored” in the context of Bankruptcy Law, and that payment can be seized and redistributed among all of your creditors. This whole situation is an unwanted headache when you’re filing; sometimes trustees even have to go as far as suing the creditor for seizure of the payment. Of course, there are ways of getting around this, and if you hire a worthwhile attorney, you’ll be able to explore all the options available to you. As always, it helps to stay current on the ins and outs of this section of bankruptcy law.
2. Maxing out Credit Cards
a. Credit card debt is a major factor for those looking to file; its often one of the main debts one is hoping to discharge. However, if an individual thinks that they can splurge on extraneous purchases with a credit card before filing for bankruptcy, they are wrong. This is considered fraud and is highly illegal. The court may deem those debts non-exempt, and they could be waiting for you after bankruptcy. Or worse, they could throw out your entire bankruptcy case. Bottom line: don’t rack up more debt thinking that it will be discharged.
3. Keeping Debt you Can’t Afford
a. Bankruptcy is meant to be your shot at a fresh start. If your filing doesn’t go through then you have to wait another 8 years before you’re eligible to file. People often hang on to items that are of sentimental worth, like a house, or maybe a car, even if what they owe may exceed the item’s actual worth. This can come back to haunt you, because after bankruptcy those remaining debts won’t get you off to a good start.
4. Failing to Disclose All Assets to an Attorney
a. You need to disclose all of your assets to your attorney, that’s the bottom line. Failing to disclose an asset could constitute perjury in your bankruptcy filing, and ultimately if the trustee finds out about it, it will be seized anyway. Where many folks run into trouble is a misunderstanding of certain bankruptcy exemption laws pertaining to their state. Often times, someone may fail to disclose an asset when its too late to be claimed for exemption, and its’ seized nonetheless. If you live in Washington, it’s important to stay up to date on the Washington State Exemption Law.
Failing to Hire a Bankruptcy Attorney
a. This one may be obvious, but it’s a mistake that too many make. Thinking that you can navigate the complicated territory of Bankruptcy without the aid of a professional is a HUGE risk. Missing even the tiniest of details can result in a huge personal and financial cost. It’s not worth the risk. Bankruptcy can be daunting, but you don’t have to go it alone. The attorney’s at Integrity Law have amassed years of experience and knowledge and are entirely capable of guiding you through everything. If you’re not ready to hire an attorney just yet, there are a number of great resources out there with which to educate yourself so you can hit the ground running when you’re ready to file.