What are some common mistakes people make in Bankruptcy?

| Mar 23, 2018 | chapter 7, Firm News |

If you are thinking about filing for bankruptcy in the East Orange area, you should be careful about what you do in the months leading up to it. Though you expect for it put an end to the nonstop creditor harassment you are experiencing, lighten your financial burden and make it easier for you to sleep easier at night, the wrong moves could result in the dismissal of your case. Mistakes can also lead to complications that prevent you from receiving the full benefits of Bankruptcy protection. 

The one thing you do not want to do is make mistakes that could cost you your financial freedom and peace of mind. Take some time to review some common mistakes that people often make when filing for bankruptcy so you can avoid them to improve your situation. 

Going on a shopping spree 

The moment you file your bankruptcy papers, you certify that you are in extreme financial hardship and have little to no money to support your household. You might feel tempted to go on a shopping spree and max out your credit cards because you expect for the debts to be forgiven or reduced in bankruptcy. Until your bankruptcy is approved, the courts will scrutinize your financial activity. They might also look at your financial behavior in the months leading up to your filing date. Any wasteful and unnecessary spending might be considered fraud and carries serious legal consequences. 

Hiding assets 

Many people believe they will lose all their assets when they file for Chapter 7 bankruptcy. That is not necessarily true. The courts do allow exceptions for some assets. You should not hide or lie about your finances and property. It is imperative for you to be as truthful as possible to avoid misleading the court. If you hide assets and the courts find out, you could lose the right to claim exceptions and have to give everything up. Also, “hiding assets in bankruptcy is a federal crime” that could land you in jail, states Working Moms Word. 

Bankruptcy is not an easy process. Before filing, you might benefit from speaking to an attorney for guidance.