Exploring Civil Case Proceedings

Three Bankruptcy Filing Mistakes To Avoid

19 July 2017 by Becky Freeman

No one wants to file for bankruptcy, but sometimes it becomes necessary. Fortunately, once the stress of the proceedings are over you will have a fresh financial start. You don't want to do anything that could compromise your bankruptcy case, though, so it's important to be mindful of the following mistakes so that you can avoid them.

#1: Accumulating extra debt

Don't go out and rack up more depth just because you have determined that bankruptcy is the best option for your situation. Bankruptcy is designed to help those that have a legitimate need, so going out and running up credit card bills or making large purchases on credit in the hopes that they will be discharged during your bankruptcy isn't a good idea. The courts are used to seeing such behavior, and they will act accordingly. Spending unnecessary money on credit right before or right after filing sets off red flags, which means those debts may be declined in the bankruptcy and you will still have to pay them. Even worse, this sort of behavior can lead to your entire bankruptcy being denied so that all you end up with is more debt on top of the initial amount.

#2: Not disclosing your actual assets

Every asset you own must be disclosed in your bankruptcy filing, including joint assets that are owned with someone not named on the bankruptcy paperwork. Attempting to hide assets will only hurt you, as it is seen as dishonest behavior. The court will likely be able to trace any assets that you recently sold or transferred ownership of right before bankruptcy. Some people, for example, "gift" big ticket items, like land, cars, or boats, to friends and family before filing for bankruptcy, with the hopes of having ownership transferred back afterward. The court can actually require that the items be returned and sold to pay debts. You are better off being honest upfront about your assets rather than jeopardize your bankruptcy case.

#3: Skipping the exemptions

You are allowed certain exemptions, depending on the type of bankruptcy you file. Often, these exemptions include your home, but they can also include your car if you can show a need to keep it -- even if you still owe money on the vehicle. You may also be able to exempt certain items from the proceedings completely, such as assets that are important to your livelihood or quality of life. Some exemptions are state exemptions, while others are allowed under federal law. You should work with a lawyer, such as one from a place like Dunbar & Dunbar, to determine which type applies in your case.

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