Millions of Americans file for bankruptcy every year. However, not everyone has a smooth process. Many make mistakes that end up derailing the entire process and, as a result, miss out on the potential benefits.
If you are thinking of filing for bankruptcy, below are some common blunders you need to avoid:
1. Lying about your assets
During bankruptcy, you should be forthcoming with all your financial details. If you intentionally leave out some assets or lie about your income, your bankruptcy petition could be dismissed. In some cases, being dishonest may amount to bankruptcy fraud, and things can escalate very quickly.
2. Giving away assets to friends or family
You might be tempted to give away some of your assets to close friends and family before filing for bankruptcy. However, it is not advisable. You could lose the asset in question or get in trouble with the law.
3. Getting into more debt
You need to be careful with your finances in the months or weeks before filing for bankruptcy. Getting into new debt while you are aware you are not in a position to pay can seem like you took advantage of the situation, and a bankruptcy court might not discharge such debts. So, avoid running up your credit card debt or applying for new loans.
4. Waiting too long before filing
You need to file for bankruptcy at just the right time. It can help protect some of your assets from creditors who would have otherwise repossessed your property. If you delay taking action, it might be too late.
Bankruptcy can help you out of a financially messy situation when done right. Being well prepared before filing for bankruptcy will ensure you have a smooth experience and help you bounce back.
