Filing bankruptcy is one of the most difficult things many will do. However, it can also be one of the smartest things an individual or couple can do to regain control of their lives.
Once the decision is made to do it, there is a sense of relief. But there is a difference between simply doing it and doing it right. Below is a short list of avoidable mistakes that can help before, during and after the process.
5 mistakes that can be avoided
While these are numerically listed, different bankruptcy filings have different issues:
- Not listing all creditors: This is an easy mistake to make, especially if collection calls and letters are coming in at a dizzying pace.
- Hiding assets: It’s tempting to hide cash, give a relative something valuable to hold onto or not list a bank account, but attempting to hide assets can lead to fines or prison and can also put your bankruptcy filing in jeopardy.
- Repaying family first: This may alleviate stress among family members, but attempting to pay them or any creditor first will be viewed as preferential, and a bankruptcy trustee may require them to give the money back to the bankruptcy estate.
- Going on a spree: One last shopping or spending spree on the credit cards just before filing may not be dischargeable.
- Waiting too long: It is a hard realization when one finds it necessary to file bankruptcy, but debt can grow exponentially at the end, leaving filers with considerably more debt than if they had acted as soon as they realized they needed to file bankruptcy.
Other issues will come up
Working with a knowledgeable bankruptcy attorney will be a tremendous help. They work with clients to tailor solutions that avoid these and other mistakes.