Filing for bankruptcy can be a difficult process, both emotionally and logistically. Both Chapter 13 and Chapter 7 bankruptcies also tend to require complicated and thoughtful preparation.
Knowing some common mistakes to avoid before you begin can help you avoid disaster at a later point. As every situation is different, you should also have the help of a qualified attorney at all stages so that you can get advice specific to your needs.
Waiting too long to file
Many people, understandably, see bankruptcy as a last resort and keep putting it off, thinking they can find a different way to deal with their financial problems. Delaying filing for too long, however, can limit how much bankruptcy can help you, especially if you already face lawsuits from creditors. Discussing solutions with your lawyer before you have your back to the wall tends to leave you with more and better options.
Leaving money in potentially freezable accounts
Some banks will freeze your account as soon as you file for bankruptcy, even if you do not owe it any money. Is this 100 percent legal? There may not be a clear answer, depending on the facts, but some banks will do this in any case, and it can take time you cannot afford to get back access to your funds. For this reason, it is important to do your research before you take action.
Failing to disclose assets or debt
Preparation for filing includes assembling a complete list of assets, debts you owe as well as debts others owe to you. Leaving items off this list can cause various types of problems. Commonly, people may forget to list property they have given away or even simply lent to someone else and never asked for it back. As long as the title is still in your name, you probably still need to include it. Likewise, if you expect a tax refund, it can count as a debt owed to you. Ask your lawyer if you feel in doubt about whether you need to include any particular item.