Mistakes People Make When Filing Bankruptcy
Posted on: 30 June 2021
No one knows what tomorrow holds. Financial circumstances change like the weather. If you find yourself in a financial constraint and you aren't credit-worthy, you may opt to file for bankruptcy. In this case, you need to get in touch with a bankruptcy attorney. Here are the mistakes you need to avoid when filing bankruptcy.
Choosing the Wrong Bankruptcy
One of the reasons it's advisable to hire a bankruptcy lawyer is to ensure you file the right type of bankruptcy. There are different forms of bankruptcy you can choose from, including Chapter 7, Chapter 11, and Chapter 13. The processes involved with each of these forms are different.
Under Chapter 7 bankruptcy, nonexempt assets are liquidated, and the funds are used to settle creditors' debts. Under Chapters 11 and 13, you are required to commit to a repayment plan with the goal of clearing your debts in three to five years. Filing the wrong bankruptcy means that your petition may be rejected.
Failure to Disclose All of Your Assets
People file for bankruptcy to clear their debts. A debtor should be honest if they intend to clear their debts. Filing for bankruptcy involves preparing documents that you'll file with the court. The process involves listing all your assets, including your bank account, home, vehicle, and more.
If you fail to disclose assets in your bankruptcy documents, this could delay your case. Furthermore, your bankruptcy trustee will view it as a fraud attempt. To ensure you succeed in your bankruptcy filing, your bankruptcy lawyer will help you disclose all your assets in the bankruptcy documents you'll present in court.
Forgetting to Declare Debts
There's no limit to the amount of debt you should have to qualify for bankruptcy. Bankruptcy is usually right for you if you cannot repay debts outside of bankruptcy and if your creditors are committed to working with you.
When filing for bankruptcy, you should disclose all the debts you owe. This includes the debts you owe to family and friends. While fixing an omission you forgot in good faith is possible, this leads to suspicions that you're discriminating against some creditors. Fixing this problem later also entails filing more paperwork. To ensure you don't omit any debt, you should have a bankruptcy attorney help you list all your debts.
Conclusion
Filing for bankruptcy is an engaging process that involves a lot of paperwork. Handling it alone may mean a lot of mistakes and the risk of your petition being declined. Choosing the right attorney is your best chance of getting the whole process right.
Share