If you feel as if you have hit rock bottom and are so deep in debt that you cannot dig your way out, you might be thinking about filing for bankruptcy. Many people in the East Orange area fall on hard times and rely on bankruptcy to give them a fresh financial start. As tempting as it may seem for you to rush and submit your petition to the courts, you do not want to make mistakes.
Bad financial habits in the weeks and months before you file your paperwork for bankruptcy can have an impact on your case. Review the following list of mistakes to avoid so you can improve the outcome of your financial situation.
Maxing out the credit cards
Once you file for bankruptcy, you should not use your credit cards. Put them away or chop them up. If you run up a huge tab on your credit cards in the months before your filing date, the courts may classify those debts as nondischargeable, leaving you with more debts to pay off.
Using retirement account funds to pay down debts
You might feel so pressured to pay off your debts that you are thinking about using money from your qualified retirement accounts to do it. Bankruptcy protects certain retirement accounts. You might not need to drain your retirement savings to get a fresh start.
Filing under the wrong chapter
There are two types of bankruptcy you can use to take care of your debts, Chapter 7 and Chapter 13. It is important for you to file the appropriate chapter for your situation to achieve the full benefits. According to FindLaw, Chapter 7 bankruptcy is ideal for individuals whose income falls below a certain level. Chapter 13 is more beneficial for people who are ineligible for Chapter 7.
Bankruptcy is a great option for anyone who has a considerable amount of debt and looking for a brand new financial start. However, it is not right for everyone. Careful consideration of one’s debts, their ability to pay and a full understanding of their financial circumstances is necessary.