Many people who file for bankruptcy are first-time filers. They are unfamiliar with bankruptcy law, are overwhelmed by their debts and creditors, and are prone to make mistakes when it comes to their bankruptcy. It is important to consult with an experienced bankruptcy lawyer at the outset of your bankruptcy so that you can avoid making common mistakes that can jeopardize the outcome of your bankruptcy proceeding. Below are several common mistakes people make as they go into bankruptcy.
- Not hiring a bankruptcy lawyer when you really need one. While there is no obligation that you hire a bankruptcy lawyer, you might be in a situation where having one is the best possible thing to do for yourself. If you are in way over your head, don’t have the time necessary to dedicate to your bankruptcy proceeding, or have complicated assets, getting a lawyer might be critical to the success of your bankruptcy proceeding. A lawyer will know how to avoid potential pitfalls and can help keep your bankruptcy proceeding on course.
- Getting taken advantage of by a credit consolidation scheme. There are a number of credit consolidation agencies out there who advertise that they can help you avoid bankruptcy by consolidating your debts. Engaging one of these companies might allow you to restructure your debt, but you will pay for the service provided, you might incur tax liability because of the restructure of your debt, and your credit score could be negatively impacted by the use of a credit consolidation service.
- Attempting to hide assets. Hiding assets prior to a bankruptcy is a big no-no. Many inexperienced bankruptcy filers will try to give money to relatives, or transfer assets to relatives in the year or months leading up to a bankruptcy. These transfers in most cases can be clawed back from whoever you made the transfer to and will then be redistributed to your creditors.
- Failing to list each and every creditor you have on your bankruptcy petition. You might have dozens of creditors… too many to keep straight or too many to even remember. But when you file your bankruptcy petition, you need to make sure that each and every one of your creditors is listed. If you do not list a creditor, there is no way that you will be able to discharge the debt associated with that creditor during your bankruptcy.
- Failing to list all of your assets. Bankruptcy is a full disclosure type of proceeding. All of your financial affairs need to be on the table ready for investigation and review. This means that in addition to listing every creditor you have, you also need to make sure that every single asset of value you own is listed in your bankruptcy filings. Deliberately excluding an asset from your bankruptcy paperwork is considered concealment, and failure to disclose all of your assets is considered fraud. You can face federal criminal charges if you commit fraud during your bankruptcy.
If you are considering bankruptcy, you should also consider discussing your situation with an experienced bankruptcy lawyer. Please do not hesitate to contact the bankruptcy lawyers at the Hathaway Law Center.