Taking the decision of filing for bankruptcy is undoubtedly a hard one. It should be one of those decisions that must be taken after thorough consideration since it can greatly impact not only one’s financial status but lifestyle as well.

Chapter 7 vs. Chapter 13 Bankruptcy

Some people make certain mistakes that make the process of filing for bankruptcy more difficult for them and lead them in dire circumstances in the later stages. In this post, we have shed light on a list of things that you shouldn’t do before filing for bankruptcy. This will help you to have a rather smooth bankruptcy process. Read on to know more about these things:

Hide Assets

When filing for bankruptcy, some people make this mistake of hiding their assets. Some people also sell or transfer them. This is generally done to protect these assets from being sold for the purpose of credit settlement. The reason it is recommended not to make this mistake is that you will be asked for every transaction you have made during the bankruptcy phase. Not having a convincing explanation may weaken your case. Furthermore, the bankruptcy court checks each and every detail during the whole process. If you have hidden an asset and the authorities have gotten to know about it, you may land into legal troubles as you can be charged with a criminal penalty.

Misrepresent Details

Another thing strictly forbidden to do prior to filing for bankruptcy is the misrepresentation of details. Dishonesty during the bankruptcy phase can cost you a lot. It is of utmost importance to provide all accurate details related to financial history, assets, debts, expenses etc. Failing to provide accurate details deliberately can land you in legal hassles. You may have to pay a fine or face imprisonment. Thus, the already tough process of bankruptcy can become even more daunting to deal with.

Filing too Early or Too Late

It is advised to find the right time to file for bankruptcy. Filing too early or too late can impact the overall process of bankruptcy adversely. Some people rush into the process of bankruptcy as they think it will wipe out all their debts. However, this is not the case. They may have to repay the loans they had obtained after the bankruptcy period is over.

In some cases, filing for bankruptcy at the earliest can prove to be beneficial as well. Particular in a case when an individual has faced a lawsuit from one of their creditors, filing for bankruptcy prior to the verdict of the case can help to stop the lawsuit. Their debt may also get wiped out. However, it depends on various other factors as well.

The idea is to clearly evaluate the situation before filing for bankruptcy. Filing too early or waiting for a long period of time, both have their own pros and cons. One should thoroughly examine them before taking the right decision. Filing for bankruptcy at the right time can ease out the complexities involved.

Not Considering the Bankruptcy Options

People only file for bankruptcy since they have no way out without considering both the bankruptcy options. This is a dire mistake that can cause a lot of troubles in the long run. Before filing for bankruptcy, it is important to consider the options you have at your disposal. Check whether you qualify for a chapter 7 bankruptcy or chapter 13. If you are opting for the chapter 7 bankruptcy, all your debts can be wiped out. However, when it comes to chapter 13, a complete repayment plan is drafted for the filer, which allows them to repay all the debts they owe in the timespan of 3 to 5 years.

File Incomplete Paperwork

When filing for bankruptcy, it is important to file complete paperwork. If you have missed out on filing necessary papers, it will result in a delay in the bankruptcy process as you will have to do file some additional papers. Furthermore, you will also have to pay extra fees to file these additional papers. In some cases, your case can get dismissed as well if you filed incomplete paperwork. Thus, it is advised to pay attention to each and every requirement and make sure it is followed in a proper manner when filing for bankruptcy to save yourself from hassles and chaos in the long run.

The best approach to ensure none of the bankruptcy mistakes are made is to take the assistance of an experienced bankruptcy attorney. They will help to prepare your case and complete all the formalities involved in a professional way. This will make the filing process a smooth one for you. Furthermore, an expert attorney will also help to decide which is the right time to file for bankruptcy.