Chances are you are not familiar with the bankruptcy process and all you want is for the whole event to go smoothly.
Here are five mistakes you can easily avoid to make that happen:
- Having an incomplete list of creditors
Remember that the law requires you to list all your creditors when filing for bankruptcy protection. Your trustee may not discharge a debt you fail to initially report.
- Repaying a family obligation prior to filing
If you owe money to a family member, do not make the repayment prior to filing bankruptcy. The trustee who administers your case may interpret this as a “preferential payment” and disallow it. Your family member will likely have to send your repayment to the trustee.
- Failing to mention all assets
Do not fail to list a second bank account. Do not try hiding a sum of cash by transferring it to the bank account of a relative or friend. If you attempt to hide assets prior to a bankruptcy filing, you could face fines plus time behind bars.
- Indulging in a spending spree
Do not fall into the trap of believing it is OK to go on a spending spree with your credit card before you file for bankruptcy. Your trustee will likely not discharge big-ticket items that show up just before the filing.
- Waiting too long to file
Finally, procrastinating is not a good idea. Every day you wait to file Chapter 7 or 13 only increases the amount of debt you are carrying. Delinquent bills may go to collection agencies and from there to your bank account in the form of wage garnishments. Your creditors will also hound you on the phone. Take the initiative. Learn more about the benefits of filing for bankruptcy and be proactive. The sooner you file, the sooner you can enjoy a brighter financial future.