Bankruptcy happens to good people. No matter the cause, bankruptcy can impact people of all demographics and backgrounds. Bankruptcy, fortunately, was designed to help those facing insurmountable debt and financial hardship, get a fresh start and eliminate most if not all debt. Unfortunately, the process of filing for bankruptcy is complex comes with a plethora picayune paperwork and legal dealings. This means that mistakes can, and often do, happen. Here are some of the more common mistakes made in the bankruptcy process.
- Going it Alone – Many people feel that cutting corners and going it alone by filing without a qualified bankruptcy attorney may save money, but think again. As some lawyer once said “you get what you pay for!” Going it alone is fraught with peril for the go in alone debtor. Talk to a bankruptcy attorney in your state to learn about the requirements and restrictions before taking any action. Hiring someone who is practiced in the changing bankruptcy laws could mean the difference between having your bankruptcy make it through the courts, having your petition rejected or worse.
- Paperwork Mistakes – Too many people make clerical errors when filling out the required paperwork. Having an attorney draft the documents with you assistance is essential. Having an experienced eye looking everything over with you prior to filing is also essential. If you do decide to file without an attorney and are relying on documents you find online you may miss important schedules, neglect to take your exemptions or fail to file a necessary document. Working with an attorney will eliminate those errors and make for smooth sailing through your proceeding.
- Running Up Credit Card Balances Before Filing Bankruptcy – Many potential filers say that they are going to use up all their available credit before filing for bankruptcy. This usually does not work for the filer. The creditor will review your credit card charges after receiving the bankruptcy notification. If the creditor believes you ran up your credit card balances before filing, it has the right to challenge your request to eliminate some or all of your balance. You could end up owing money on your credit cards after your bankruptcy is over. Speaking with an experienced bankruptcy attorney is important so you can determine what can and cannot be done prior to filing.
- Transferring Property – Many people mistakenly think they can protect property like homes, cars, jewelry and cash by giving it to a family member before filing bankruptcy. Transferring any assets for the purpose of protecting them from being taken is not the right way to go about protecting them. Talk to your bankruptcy attorney about how to legally protect assets that might otherwise be at risk.
- Failing to List all Lawsuits – If you are in the process of suing anyone for anything, that is considered an asset and must be listed as such in your bankruptcy paperwork. You may be able to continue with these cases, but the court-appointed bankruptcy trustee must know about any and all lawsuits or potential lawsuits.