Common Mistakes to Avoid Before Filing Chapter 7 Bankruptcy
Chapter 7 Bankruptcy Lawyer
If you’re overwhelmed with debt, you may be thinking about filing for Chapter 7 bankruptcy. The bankruptcy discharges most of your unsecured debts, allowing you to get a better hold on your finances. However, if you make certain errors during the process, it could jeopardize your bankruptcy case.
Here are a few common mistakes to avoid before filing Chapter 7 bankruptcy.
Using Your Credit Card for Luxury Purchases
If you have to buy necessary items, like groceries and gas, on your credit card, that’s one thing. However, if you use your credit card to purchase luxury items, like clothes or vacations, before filing for bankruptcy, that’s not going to look so good to a judge. It can result in your bankruptcy case getting rejected.
Paying Back Family Members or Friends
If you had to borrow money from family members or friends while you were struggling financially, it’s understandable that you may want to pay them back as soon as possible. However, if you plan to file for bankruptcy, you can’t just repay family members or friends and forget about your other creditors. Bankruptcy judges prohibit favoring one creditor over the other. A bankruptcy trustee can actually reclaim the money you paid back to your family or friends.
Borrowing Money from Your Retirement
Another common mistake people make before declaring bankruptcy is taking money out of their retirement funds to pay off debt. While this may sound like a good idea at first, it doesn’t provide you with any benefits. Retirement funds are completely protected against creditors in bankruptcy. Also, if you take funds out of your retirement account early, you may owe a penalty.
Providing False Information in Bankruptcy Paperwork
When you want to file for bankruptcy, you will be required to provide information about your debts, assets and income. It’s important to be completely honest in your paperwork. If you fail to disclose an asset or are dishonest in any way, your bankruptcy case will get dismissed. You may even face criminal penalties.
Not Hiring a Bankruptcy Lawyer
Chapter 7 bankruptcy can involve many complexities, so it’s in your best interest to work with an experienced bankruptcy lawyer. A Chapter 7 bankruptcy lawyer, like Carolyn Sector, P.A., can make sure that you correctly fill out the paperwork and submit it on time. He or she can also prevent you from making costly mistakes.