You crunched the numbers and realized it was impossible to pay back your growing debt no matter how hard you worked. The next sensible step is to seek debt relief by filing bankruptcy. Not everyone will have a choice of which category they pick, but it will likely be the structured payments of Chapter 13 or the more severe liquidation of Chapter 7. You are smart to take control and move forward. The next step for the new fiscally responsible you is to avoid the common mistakes made by others.
5 common mistakes in filing
Each individual or family’s circumstances are different, but there are common themes that emerge. These include:
- Not listing all creditors: It can feel like you are drowning in bills, but it is crucial to include all creditors instead of the ones that are most aggressive.
- Hiding assets: It may be tempting to cash big checks, hide money, or give money or assets to a family member to hold onto, but this is against the law. It can also put your discharge in jeopardy.
- Repaying family before filing: Showing preferential treatment by repaying some creditors and not others often lead to the creditors being forced to return the money paid to a trustee in charge of the bankruptcy.
- Going on a spending binge: Large charges on a credit card just before filing bankruptcy may not be dischargeable. Put those cards in a drawer as soon as you realize you will not be able to pay them off.
- Waiting too long: Filing bankruptcy is a tough decision, but many struggle long after they should have filed, thus making the recovery that much longer and more difficult.
Bankruptcy attorneys provide guidance and protection
Bankruptcy attorneys can be a tremendous help in filing all the necessary documents and stopping the harassment of debt collectors. They can also provide comfort, guidance, and protection throughout the entire process.