Bankruptcy can have immeasurable benefits for people who are overwhelmed by their creditors and their debts. The decision to file for bankruptcy is often difficult, and it leaves many people feeling hopeless. However, filing for bankruptcy can provide a much-needed relief from serious debt but you have to do it correctly or you could make some very serious mistakes.
In order to enjoy this new financial start, the first thing you need to do is to actually file for bankruptcy. As with most other legal processes, filing for bankruptcy has specific requirements that need to be fulfilled, and there are certain procedures that have to be followed in order for you to receive your bankruptcy discharge. Avoiding bankruptcy mistakes will make your case go smoother and will cause fewer problems as you try to obtain your discharge. Here are four common mistakes to avoid during your bankruptcy:
Not Considering Other Options Besides Bankruptcy
Although filing for bankruptcy can be an effective way to obtain relief from debt, it isn't necessarily the best option for everyone. Various factors will help determine if bankruptcy is right for you, and an experienced bankruptcy attorney will be able to help you make that decision. Before filing for bankruptcy, make sure you meet with a bankruptcy attorney who can look at your financial situation and give you advice regarding the best decision moving forward.
Filing for the Wrong Type of Bankruptcy
If filing for bankruptcy is truly the best option for you, the next step will be to determine which type of bankruptcy to file for. A bankruptcy attorney will be able to give you advice as to which type of bankruptcy you should file for, and it usually comes down to either Chapter 7 or Chapter 13. If you choose to file for bankruptcy without the help of an attorney, filing the wrong chapter of bankruptcy can be a detrimental mistake. Filing for the wrong type of bankruptcy can lead to the dismissal of your case, failure to get a discharge or even a loss of the assets that you're trying to protect.
Failing to Disclose All of Your Assets
The goal of bankruptcy for the honest, but the unfortunate debtor is a discharge of his or her debts. The debtor must be honest in order to achieve his goal. When you file for bankruptcy, you'll need to prepare bankruptcy documents to file with the court. Part of this process involves listing out all of your assets including your home, vehicle(s), bank account(s) and more. Forgetting to disclose any of your debts, or deliberately hiding them, will only create problems as your bankruptcy case progresses. Failing to disclose assets in your bankruptcy documents can lead to a delay in your case or your bankruptcy trustee could view it as an attempt to commit fraud. To avoid complications and problems, it's important that you work with your bankruptcy attorney to disclose all of your assets in your bankruptcy documents.
Not Completing the Financial Management Course
During bankruptcy, you're required to complete two credit counseling courses. Before you can file for bankruptcy, you're required to consult with a credit counseling agency and complete a credit counseling course that's been approved by the United States Trustee's Office. Before you can receive your discharge, you're required to take a personal financial management course. If you do not complete the second course, you will not be eligible to receive a discharge. It's best to complete the financial management course immediately for most people. However, there are circumstances where your attorney may advise you otherwise.
If you are considering filing for bankruptcy, the best thing you can do is to do your research and be informed about the process. I would encourage you to read as many blogs about bankruptcy as possible or watch as many videos as you can. An experienced bankruptcy attorney will be able to explain the bankruptcy laws and process to you, and they'll be able to help you assess your current financial situation.