Filing for bankruptcy can help you eliminate your debt and get a fresh start. This is helpful for people who have too much debt and can't even afford the monthly debt payments.
Making the decision to file for bankruptcy can be stressful, although an attorney will work with you during the entire bankruptcy process. An attorney can help you determine which bankruptcy is best for you: Chapter 7 or Chapter 13.
However, there are several serious mistakes you can make during or before filing bankruptcy that will make your path to a financially stable future more challenging.
Avoiding these dangerous mistakes can help your bankruptcy run smoothly and be over in the quickest and cheapest way. By not avoiding these dangerous mistakes you will potentially be in bankruptcy longer, pay more, lose the benefits of your bankruptcy discharge, or even be fined and go to prison.
Avoid these dangerous mistakes before and during your bankruptcy for a smooth and hassle free experience.
1. Waiting Too Long to Make the Decision to File for Bankruptcy
Dealing with debt, missed payments, overdue bills and harassing collection calls can be very stressful.
This stress and debt can have a snowball effect on you and your finances.
Exploring your bankruptcy options, including possible alternatives, as soon as you realize you are having difficulties with your finances can be the smartest move.
2. Running Up Credit Card Debt
If you run up your credit cards or take out any further debt immediately before filing bankruptcy you will get in trouble.
This is not allowed and could possibly result in bankruptcy fraud charges or your discharge being delayed.
The goods or services you purchased will be returned and the debt will not be discharged.
Without your bankruptcy discharge, you will not receive relief from your debts, and your unsecured creditors can pursue you for collection on your debts.
3. Concealing Assets
Not reporting all of your assets to your trustee is a serious offense and is the most common bankruptcy-related crime.
Failing to disclose assets or transferring them before filing bankruptcy so your trustee cannot sell the assets to distribute to your creditors can result in fines or even jail time or both.
4. Fail to Complete Your Bankruptcy Duties
Not completing all of the duties required of you in your bankruptcy will result in your bankruptcy taking longer, and ultimately costing more, as you will not receive your bankruptcy discharge until you have completed all of your bankruptcy duties.
5. Not Consulting an Attorney
You must provide your bankruptcy lawyer with information about your income, assets, and debts.
If you do not provide the trustee with complete and accurate information about all of this information and any other information the attorney requests you will face serious consequences.
Consequences of any of these bankruptcy mistakes can be very serious. In addition to your bankruptcy discharge being delayed, you could also face fines and lengthy prison sentences.
How Many People File for Bankruptcy?
Did you know that personal bankruptcies continue to decline? Here are the stats of bankruptcy filings according to USCourts.gov.
| Fiscal Year | Total Nonbusiness Bankruptcies | Chapter 13 Nonbusiness Bankruptcies |
|---|---|---|
| 2014 | 935,420 | 310,914 |
| 2015 | 835,197 | 300,528 |
| 2016 | 781,123 | 296,824 |
| 2017 | 767,721 | 294,500 |
Many people are learning the alternatives to filing for bankruptcy which include negotiating with their creditors, get help from a credit counseling agency and get debt counseling.
The Bottom Line
By avoiding these dangerous bankruptcy mistakes, you can get on the right financial path in the easiest way, with the least amount of stress, worry, and cost.
If you are considering filing for bankruptcy you need to be aware of these dangerous mistakes.
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