Filing for bankruptcy can help you get out of debt and improve your financial situation. But it is a complex and time-consuming process with many rules. Filing yourself is never recommended. A single mistake can be costly, get your case dismissed, and result in legal penalties. A bankruptcy attorney is knowledgeable in the U.S. Bankruptcy Code and can avoid the following mistakes:
A trustee is appointed at the start of your case. Their duties include reviewing your petition for bankruptcy and all the relevant documentation you provide. You’ll need to document your earnings, expenses, debts, and other financial matters. If you forget to include any of them, your bankruptcy case can be dismissed or delayed by extra hearings to review missing records.
Not Listing All Creditors
Federal law requires listing all your creditors in a bankruptcy filing. Whether you don’t want to list certain creditors or inadvertently forget some, it can jeopardize your case. . All creditors and lenders must be included if you intend to pay them back. Leaving one out means the debt you owe them won’t be discharged, which defeats the purpose of filing for bankruptcy.
Not Revealing All Assets
A bankruptcy attorney will examine all your financial assets, including every bank account. Transferring large sums of money to a relative from an extra account is illegal. It would prevent the discharge of related debts and could result in a fine or prison time. Your attorney will ensure there are no signs of bankruptcy fraud.
Paying Loans Back to Family Members
Even if you attempt to pay family members back over other creditors, the court may see this as preferential treatment. It might require family members you paid to return the money. Therefore, let the court resolve the matter and follow the advice of your bankruptcy attorney before trying to pay anyone back.
Making Large Purchases
Bankruptcy won’t discharge purchases made within a certain time before filing. Therefore, you won’t get away with going on a shopping spree and running up your credit cards. The courts may not discharge these debts. If you’re struggling to make credit card payments, stop using them before filing for bankruptcy.
Filing Under the Wrong Chapter
Different types of bankruptcy apply to different situations. If you want to discharge unsecured debt, you’ll likely file for Chapter 7 bankruptcy. Meanwhile, Chapter 11 bankruptcy is for businesses and high-net-worth individuals. It discharges debt and protects certain assets. If you earn a regular income but owe large amounts of debt, you may want to consider a Chapter 13 filing and create a payment plan. You’ll save time and money by focusing on the right solution from the start.
Not Considering Exemptions
Bankruptcy exemptions can protect important assets, including your home, car, and other property. An experienced attorney knows how exemptions work. They can determine which ones you can use to reveal if keeping your home or vehicle is an option.
Waiting Too Long to File
Start exploring your options as soon as your debts become a burden. Having a bankruptcy attorney is a right under the law. A legal representative can avoid mistakes and provide advice to prevent your financial situation from getting worse. They can also help avoid collections, wage garnishments, and even foreclosure. With legal advice and support, you can protect your assets and have an opportunity for a fresh financial start.
Contact OakTree Law
Filing for bankruptcy can discharge unsecured debt, reorganize your finances, and halt collection efforts. Our Los Angeles bankruptcy attorney can determine the type of bankruptcy protection available to you. We ensure you avoid some common mistakes and get on track to a better financial future. To request your free evaluation, contact us online or call 888-348-2609.