As you grapple with the thought of filing for bankruptcy, it is crucial to remember that this decision, while difficult, can also be a fresh start. Yet, it is equally important to navigate this process meticulously to avoid costly pitfalls that could derail your path to financial recovery. The following guide will discuss some of the most common mistakes made during the bankruptcy filing process and provide tips on how to avoid them.
One of the most common mistakes people make is waiting too long to file for bankruptcy. If you’re drowning in debt and barely managing to stay afloat, bankruptcy can provide a fresh start by discharging some or all of your debts. Delaying the decision to file often means unnecessary additional months or even years of struggle, financial stress, and possibly accruing more debt.
Bankruptcy should be your last resort after exploring all other debt management options. Consider speaking with a credit counselor, negotiating with your creditors, or exploring debt consolidation before deciding to file. Bankruptcy has long-lasting effects on your credit and should not be taken lightly.
When filing for bankruptcy, it’s essential to understand the differences between the available options – mainly Chapter 7 and Chapter 13. Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” discharges most of your unsecured debts but might require you to sell some assets. On the other hand, Chapter 13, also known as “reorganization bankruptcy,” allows you to keep your property and reorganize your debts into a 3-5 year payment plan.
When you file for bankruptcy, you must list all your debts, including personal loans, credit card debt, medical bills, and any other obligations. Leaving out any debt could mean that it won’t be discharged in your bankruptcy, leaving you still on the hook.
Before you can file for bankruptcy, you must complete a credit counseling course from an approved provider. This course is designed to help you understand your financial situation, review your budget, and explore all available options. Failure to complete this step can result in the dismissal of your bankruptcy case.
The Means Test is a crucial part of the bankruptcy filing process. This test determines your eligibility for Chapter 7 bankruptcy by comparing your income and expenses to the median income in your state. If your income is too high, you may have to file under Chapter 13 instead. Ignoring or incorrectly calculating the Means Test can lead to delays or even dismissal of your bankruptcy case.
Honesty is paramount in the bankruptcy process. Any attempts to hide or transfer assets to avoid them being used to pay off your debts can result in your bankruptcy discharge being denied or even criminal charges.
Accumulating new debt shortly before filing for bankruptcy can lead to serious complications. These debts may not be discharged, and the court may view it as fraud.
Having traversed the common mistakes that one may encounter during the bankruptcy filing process, we arrive at a vital consideration: Should you hire a bankruptcy attorney? The answer is a resounding yes, and here’s why.
Bankruptcy laws are complex, and the filing process is fraught with intricate procedures. An experienced bankruptcy attorney understands these complexities and can guide you through the process, ensuring you don’t miss any crucial steps or deadlines.
A bankruptcy attorney is your advocate. They can protect your interests, ensuring that your rights are upheld throughout the process. They can also negotiate with your creditors on your behalf.
As emphasized above, accuracy and completeness in your bankruptcy paperwork are essential. A bankruptcy attorney can help ensure that you’ve listed all your debts, properly valued your assets, and correctly completed the Means Test.
Perhaps the most valuable benefit of hiring a bankruptcy attorney is the peace of mind it brings. With professional assistance, you can be assured that your bankruptcy case is being handled correctly, allowing you to focus on planning and rebuilding for your financial future.
Bankruptcy is a difficult journey, but it doesn’t have to be navigated alone. Avoiding common mistakes in the filing process and seeking professional help can make a world of difference in securing a clean financial slate. Remember, bankruptcy isn’t the end of your financial life but a chance to start anew, free from the burdens of insurmountable debt.
At Blue Bee Bankruptcy, our lawyers are highly experienced in bankruptcy options. More importantly, we understand that each case we receive is unique and each client has different needs and goals. We will discuss these signs with you and decide the best route to take.
We strive to help our clients rebuild their lives and take steps toward a better financial future through filing.
If you’re dealing with the potential of bankruptcy, give us a call. Our team will work to help you by reviewing all of the options our firm has available. We will ensure you’ll get the best possible outcome for your situation.
Get in touch today so we can start working on either halting bankruptcies or preventing them from taking place altogether!