Bankruptcy is often the best option for people who finds themselves buried under debt, providing much-needed relief. Too many people, though, make mistakes during the bankruptcy process that could jeopardize their chance to start fresh.
If you are considering filing for bankruptcy, you should avoid these common mistakes.
Withholding financial information
When you file for bankruptcy, you must provide an honest accounting of all your debts and assets. Intentionally hiding this information to produce more favorable results for yourself could lead to serious legal repercussions.
Running up a credit card bill before filing
You might consider going on a spending spree right before filing for bankruptcy, thinking that the credit card debt you rack up is dischargeable alongside your other debt. However, creditors will examine your finances closely during the bankruptcy process and hold you responsible for paying off the charges.
Misunderstanding the types of bankruptcy
There are different kinds of bankruptcy, and you will want to choose the right kind based on your financial circumstances and future goals.
With Chapter 7 bankruptcy, your qualifying debt is completely discharged, but your creditors could sell your non-exempt assets to help pay back what you owe them. With Chapter 11 or 13, you agree to a repayment plan that allows you to pay back your debt over a few years.
With the right guidance, most people find the bankruptcy process surprisingly easy to navigate, but if you are unsure what steps to take, an advocate can provide the direction you are looking for.