Are you considering filing for bankruptcy like millions of Americans do every year? Know that you are not alone. But also know that there are some common mistakes that many debtors make during this complex process. Most bankruptcies go fairly smoothly when guided by an experienced bankruptcy attorney. Here are some of the more common mistakes made by debtors.
- Filing under the Wrong Chapter – If you are an individual filing for bankruptcy you will most likely choose either Chapter 7 or Chapter 13. Each type has benefits and drawbacks. A Chapter 7 bankruptcy will discharge most types of unsecured debt. The trustee will try to sell any significant nonexempt property, if any, in order to repay your creditors. In Chapter 13 bankruptcy, you repay your creditors (some in full, some in part) through a Chapter 13 repayment plan. If you are unsure which is the best for your situation talk to your attorney.
- Failing to Complete Credit Counseling Courses – In order to have your debts discharged, a debtor must complete a credit counseling course prior to filing and a debtor’s education course before getting a discharge; both are about handling financial situations. Without the proper certification, a court may dismiss your case.
- Form Fumbling – With any type of bankruptcy there are a multitude of forms to fill out. Forms include your petition, schedules, statement of financial affairs, and other required documents. If you don’t have an attorney, it’s your responsibility to know which forms to file and how to complete them. We suggest hiring an attorney, who will have experience with the forms and when they need to be filed.
- Hiding or Forgetting Assets – In the paperwork of your bankruptcy, you must list all assets completely. Failure to do so may mean a dismissal of your case. Hiding or forgetting about a bank account or other assets could be a violation of the law and could jeopardize your case.
- Going on a Spending Spree– Avoid taking the attitude that “it doesn’t matter” right before you file by running up your debt on your credit cards. Courts will see this as non-dischargeable. You should discontinue using your credit cards as soon as you realize you can’t pay them.
- Not Listing a Creditors – In the chaos of filing, you may be happy to be done with the paperwork. Be sure to check all your creditors and find out exactly what you owe. Omitting or forgetting creditors is a violation of the law and can also jeopardize your case. However, omitted creditors can always be added prior to the closing of your case (there is a fee to be paid). If your case has been closed, adding a creditors requires your case to be reopened (after the payment of another fee).
Call the Law Office of Barry R. Levine if you have questions about your financial situation and the filing of a personal bankruptcy.