- January 30, 2024
- Thomas Adam
- Bankruptcy
It is helpful to understand the most common bankruptcy mistakes people make so you can avoid making those errors. Every situation is different, so you will want to consult with a knowledgeable bankruptcy attorney to discuss the specific details of your case. Your attorney will assist you through the process and help you get through it without making mistakes.
File the Right Type of Bankruptcy
Before you file bankruptcy, you will want to be certain of the type that is best for your situation. The two most common types of bankruptcy for individuals are Chapter 7 and Chapter 13. Chapter 7 requires the liquidation of your major assets. It is usually best for those who are unable to make payments. Chapter 13 bankruptcy allows you to restructure or consolidate your debt and make payments over the next three to five years. You need to choose the type of bankruptcy that meets your needs.
Do Not Forget Any Assets
Forgetting about some of your assets, or worse, hiding some of your assets, is a big mistake. Remember that the court will assign someone to oversee your bankruptcy. That person has the responsibility of making sure you have disclosed all your assets and debts. They will do further investigation regarding your financial matters. Reporting irregularities could trigger a bankruptcy audit. To ensure that you include everything, talk with your bankruptcy attorney for guidance.
Do Not Add More Debt Before You File
If you are having major financial problems and have decided to file bankruptcy, it may be tempting to go out and spend more on your credit cards. After all, you are about to enter a period where spending will be limited. However, it is important to know that purchases made in the month or two prior to filing may be assumed to be abusive. It is assumed that major purchases made during this time were made with the intention of defaulting on payment. Therefore, it is in your best interest to refrain from making any new purchases prior to filing bankruptcy.
Do Not Transfer Property to Someone Else
You cannot simply transfer your property to someone else to hold it for you before you file bankruptcy. If you are found to have transferred property to another just before filing bankruptcy, it is considered fraud, and you could face negative consequences. Keep in mind that only non-exempt assets must be liquidated. In most cases, those filing bankruptcy have only non-exempt assets, and therefore, they will not need to turn any of them over to the court for sale. Before you take any action to transfer property, consult with a bankruptcy attorney.
Agree to a Payment Plan You Can Meet
One mistake that people may make in bankruptcy is to agree to make payments that are larger than they can handle. This can lead to a default on your payments and cause you even more serious financial problems. Instead, be realistic about the payments you can handle and be sure to leave some room to keep money for emergencies and unexpected needs.
If you are considering filing for bankruptcy, you probably have many questions and concerns. Our team of bankruptcy attorneys is here to help. Schedule a consultation with our legal team at Adam Law Group at (904) 351-0743 today.