5 mistakes to avoid when filing for bankruptcy

On Behalf of | Feb 5, 2025 | Bankruptcy |

Bankruptcy can offer some much-needed relief from financial difficulty, but the process is far from simple. With so many moving parts, it’s easy to make mistakes that could jeopardize your fresh start.

Avoiding these pitfalls can ensure a smoother, more successful bankruptcy process and ensure you make the most out of it.

1. Ignoring credit counseling requirements

You must complete a credit counseling course before filing for bankruptcy. It is an essential part of the process required by law and is meant to provide valuable insights into your financial situation. Skipping this step can delay your bankruptcy or even result in dismissal.

2. Failing to disclose all assets

Some people try to hide assets when filing for bankruptcy to protect them from creditors. However, this can backfire. Beyond risking the dismissal of your case, you may face serious legal consequences like criminal charges for bankruptcy fraud.

3. Not understanding the type of bankruptcy you need

Each type of bankruptcy has its specific requirements and benefits. Filing for the wrong type can affect your ability to discharge debt or keep your assets. Take time to understand your options, given your unique objectives and circumstances.

4. Racking up debt before filing

Taking out loans in the months leading up to filing with the view that they will be wiped out could come back to haunt you. Large purchases or new debt incurred right before filing may be considered fraudulent. It could delay the process or reduce the debts you can discharge.

5. Overlooking qualified legal assistance

Bankruptcy laws are complex, and even minor mistakes can prove costly. Reaching out for proper guidance through the process can save you a lot of trouble. It can help you avoid unnecessary delays, protect your interests and ensure you’re taking the right steps towards securing the best outcome for your financial future.