Avoid These 6 Mistakes When Filing for Bankruptcy
Filing for bankruptcy is a complicated process. It has many advantages if you successfully file for it. It offers you a fresh start with your finances, which ultimately allows you to leave the past behind and turn your life around. However, when it comes to filing for bankruptcy, not everyone’s case gets accepted. Some cases may be rejected due to a number of reasons. Therefore, it is very important that you try to avoid the mistakes that can result in your bankruptcy case being rejected or dismissed.
Following are 6 mistakes you should avoid when filing for bankruptcy:
1. Liquidation of your retirement account
While the retirement account of the petitioner is protected from liquidation in most bankruptcy cases, many people decide to liquidate their retirement accounts to pay down or satisfy their debts before filing for bankruptcy. It’s generally not a good idea to pursue this course of action. It is recommended that you consult with a knowledgeable bankruptcy attorney before making this decision.
2. Repaying some debts, but not all
All your debts are taken into account when you file for bankruptcy. As a result, you are likely unable to prioritize your debts. What this means is that you may ignore your creditors, but cannot choose to repay a friend. If you do, a bankruptcy trustee has the legal authority to recover any amount repaid to a family member within the time period of one year of the bankruptcy filing.
3. Securing an additional line of credit to repay creditors
In order to repay your debts, one of the last things you should consider is getting a line of credit against your property. In most cases, even if you file for bankruptcy, you are allowed to keep your property. But, if you choose to obtain a second mortgage in order to repay your credit card debt, then your house is at risk, particularly if your bankruptcy petition is denied.
4. Property transfers
The laws of bankruptcy are designed to protect both creditors and petitioners. If the bankruptcy court determines that you have made a property transfer with an intent to hinder or defraud the bankruptcy process, not only will your property transfer be reversed, you will also be charged harsh fines.
5. Disregard for hearings or other court appearances
If you have considered or filed for bankruptcy, it can be a mistake to ignore said action in case there is a civil action pending against you. Furthermore, it would also be a mistake to disregard a bankruptcy hearing, because if you do this, depending on the laws governing bankruptcy in your state, your case can be dismissed.
6. Not being honest with your bankruptcy attorney
A bankruptcy attorney can only help you when you are completely honest with him/her. If you do not disclose all of your assets to your attorney, you may lose them. Furthermore, your dishonesty can result in denial of your case, harsh fine, and possibly even jail time.
The Travis Law Firm provides professional legal representation for Chapter 7 & Chapter 13 bankruptcy services for residents of all cities in Riverside and San Bernardino Counties. We have offices in Riverside, San Bernardino, Victorville, Temecula, Cathedral City and Ontario for the convenience of our Inland Empire, High Desert, and Coachella Valley clients. For more information about our bankruptcy law services and other legal representation, call us today at 1-800-BANKRUPT or (951) 274-9501.