If your finances aren't looking too hot these days, you may be looking at the possibility of filing for bankruptcy. While it's true bankruptcy can help eliminate some of your debt, this is obviously a serious step that can have long-term consequences. If you want to increase the chances of getting your bankruptcy approved, here are three rookie mistakes you'll want to avoid.
Don't Acquire New Debt Immediately Before Filing
Yes, if you play your cards right you might be able to get a court to dismiss a large portion of your debt, such as money that you owe to credit card companies. But be careful. Don't go applying for new loans in the last few months before you file for bankruptcy. If a creditor receives a bankruptcy notice shortly after opening a new account for you, they may be able to object and say that you didn't open the account in good faith. If a court catches you doing this, you might not get the more recent loans discharged.
Don't Try to Hide Anything
If you want to stay out of legal trouble during bankruptcy proceedings, it is very important that you provide as much information as possible to the bankruptcy court. Show them every asset you currently own and don't try and hide anything. If it is discovered later on that you didn't reveal everything to the court, you might get your case thrown out or you could even end up in legal trouble. One way to make sure you are being totally honest with the court is to hire a law firm that offers bankruptcy attorney services to go over your finances with you before you file.
Don't Drain Protected Assets to Pay Off Debt Before You File
If a creditor gets wind of the fact that you might have a bankruptcy in your future, they may step up their collection efforts before the case actually makes it before a judge. But do not let yourself feel pressured in this situation. Some people make the mistake of draining assets like a retirement account to pay off debt that could be discharged in the bankruptcy. But certain funds like retirement accounts are legally protected in most cases and your creditors will not be able to access this money unless you give it to them. If you are being harassed by a creditor in the days leading up to your filing, have your attorney give them a call.
Don't move forward with a bankruptcy filing until you speak to a bankruptcy lawyer.