Filing for bankruptcy can help improve your quality of life, but only if you do everything right. Slip-ups are common, and not everyone enjoys the benefits of the bankruptcy process. Therefore, it is purposeful to learn how
1. Filing under the wrong chapter
Should you file for Chapter 7 or Chapter 13? Your decision will affect how debts will be handled, among other aspects of the bankruptcy proceeding. It may be impossible to achieve your objectives if you file under the wrong chapter.
2. Running up your credit cards
Even though you may not have to repay credit card debt after filing for bankruptcy, you can still be liable for debts incurred in bad faith. Do not run out or max your credit card limit expecting the debts to be discharged.
3. Transferring assets
Asset transfers conducted before filing for bankruptcy come under scrutiny. This is because individuals planning to file for bankruptcy transfer assets to loved ones or third parties to keep them safe.
However, such actions could amount to bankruptcy fraud, and you could be criminally liable for illegally transferring or hiding assets.
4. Withholding financial information
Filing for bankruptcy requires full disclosure of all assets and debts. If you hold back such information, it may come back to haunt you or even derail your bankruptcy proceedings. You may still be liable for dischargeable debts that you failed to disclose.
5. Not being well prepared
The decision to file for bankruptcy is not an easy one. One needs to be financially, mentally, and emotionally prepared to get through everything and regain your footing.
Learning what to expect during bankruptcy is an excellent place to begin. It will help you understand the ins and outs of the entire process and what you need to make the most out of it.