Filing for bankruptcy is a big decision and should not be taken lightly. There are many factors to consider when deciding whether or not to file for bankruptcy, and there are also mistakes that people often make in the process of filing, which can prolong the process and cause additional problems. If you’re looking to file for bankruptcy, there are a lot of things you need to know and understand first before you make any final decisions. It’s important to learn the basics and avoid making these common mistakes:
1) Filing With The Wrong Chapter
One of the most common mistakes people make when filing for bankruptcy is selecting the wrong chapter. There are different chapters for different types of bankruptcies, and each one has its own set of requirements and procedures. There are two main types of bankruptcy: Chapter 7 and Chapter 13. With Chapter 7, your creditors will sell any property that is not protected (such as a house) and gather the funds from the proceeds to pay back your debts. With Chapter 13, you will typically repay all or part of your debts over three to five years in exchange for stopping creditor actions and keeping your property. According to the team at Amourgis & Associates, this is a common mistake people could easily avoid with a lawyer. When hiring a lawyer, make sure they specialize in bankruptcy and don’t do it on your own. A good bankruptcy lawyer will help you avoid the mistake of filing under the wrong chapter, thus saving valuable time and money.
2) Not Filing On Time
Another common mistake people make is not filing for bankruptcy on time. This can result in lost wages, missed car payments, and even eviction. Filing bankruptcy proceedings late can also mean that some of your assets will be lost, and you may have to pay more money back to your creditors. It’s important to understand the deadlines for filing and to file on time in order to avoid any negative consequences. Also, you shouldn’t do it before you consult with a lawyer because they can help you determine the best time to file and what specific deadlines you need to be aware of.
3) Not Disclosing All Your Assets
When filing for bankruptcy, it’s important to disclose all of your assets. This includes any property or money you have in your name or that is jointly owned with others. If you fail to disclose all of your assets, it can result in a bankruptcy charge and penalties. You should also keep in mind that some assets are exempt, which means they are excluded from bankruptcy proceedings. For instance, Social Security income is not included in bankruptcy proceedings and the money you make from an allowance or child support is not considered to be income under federal law. This is something you should know before filing for bankruptcy to avoid any penalties.
4) Not Having All The Documentation
Prior to filing for bankruptcy, it’s important that you have all of the documentation you need in order to file. If you do not have the proper documentation when filing, it can cause delays in your proceedings and result in additional fees. Make sure to gather proof of income, proof of debt, proof of ownership (such as a car title), and any other documents that may be requested. Be sure to keep these documents in a safe and secure place and always ask for a written receipt when handing them over to someone else. Also, remember that the documentation can vary depending on the chapter you are filing under.
5) Hiding Assets or Debts
One final mistake people make when filing for bankruptcy is hiding assets or debts. This includes putting property in someone else’s name, hiding money in secret bank accounts, not reporting income, and other schemes designed to defraud the court system. If you are caught doing this, it can result in significant fines, charges of perjury, and even imprisonment. To avoid these consequences, you should avoid doing anything illegal or attempting any fraud when filing for bankruptcy. This is something your lawyer will also be able to help you with.
Bankruptcy is a complicated process that requires careful consideration from the start. Filing for bankruptcy can be one of your best solutions to get back on track financially, but you need to know what mistakes not to make before filing and how it will affect your life going forward. If you’re considering filing for bankruptcy, it’s important to learn the basics and avoid these common mistakes we listed above. Hopefully, this article has been helpful to you.
