Common Bankruptcy Mistakes to Avoid
Bankruptcy can have immeasurable benefits for individuals who are challenged with overwhelming or out of control debt. It is important for debtors to be cautious of making particular mistakes that can complicate or otherwise thwart their efforts to file for bankruptcy protection.
One of the largest mistakes that debtors make is not considering filing for bankruptcy. Even the most honest and good natured efforts can be ineffective when debtors are in a situation where their debt load is seriously out of control.
Bankruptcy can be the most viable and optimal solution for certain debtors; however, the decision is one that should not be taken lightly. There are common mistakes that debtors make that actually serve to hinder or deter them from filing for bankruptcy. If you want to file for bankruptcy, there are certain mistakes that you want to avoid so you have the best chances of reaping the benefits of bankruptcy.
One of the biggest mistakes that consumers make is to run up all their credit cards right before they file for bankruptcy. Some people think that just because they are filing for bankruptcy, they might as well max out their credit cards; however this type of thinking will get you into trouble! Certain debts that are incurred within 90 days before filing for bankruptcy are not dischargeable, which means that you may be obligated to pay those charges.
Don’t transfer property out of your name before filing bankruptcy. Some people transfer the title of their home to friends or family members before they file for bankruptcy. The bankruptcy trustee may be able to reverse such a transfer of property if the transfer was made in an attempt to hide your assets or property from the creditors. In many cases, it’s completely unnecessary to transfer property because bankruptcy exemptions may protect your home.
Don’t hide assets from your bankruptcy attorney. If you hide information from your attorney they will not be able to accurately advise you on your situation. If it is later revealed that you hid important assets or information from your attorney it can create serious risks that are not worth taking. You could lose your assets, have your case dismissed or worse, face criminal charges.
Don’t pay off credit card debts with your 401(k). Creditors can be very unpleasant and relentless; however, in the bankruptcy setting paying off credit cards are at the bottom of the list. Credit card debt is unsecured, that means they cannot seize your property, or take your home. Unless they obtain a judgment against you where your wages are garnished, they can’t touch you. It is not a good idea to deplete your 401(k) in order to pay off unsecured debt. These retirement accounts are almost always untouchable in a bankruptcy; therefore, no one will have access to this money, not even the bankruptcy trustee.
If you are considering filing for bankruptcy, the best thing you can do is get informed. A highly experienced bankruptcy attorney can explain the bankruptcy laws to you and help you assess your situation. There may be more than one workable solution to your situation, the sooner you learn about your options the sooner you can be put back in the driver’s seat. Don’t hesitate to contact a seasoned San Antonio bankruptcy lawyer today!