Bankruptcy is a legal process that can give you a fresh financial start when overwhelmed by debt. It can be an invaluable tool for managing financial distress, but it’s essential to navigate the bankruptcy process carefully.
Mistakes are commonplace before, during and after filing for bankruptcy. Unfortunately, many individuals are often unaware of the potential pitfalls that can hinder the process and affect their financial future. Below are some of these avoidable blunders you should be wary of if you are considering bankruptcy.
Filing under the wrong chapter
Filing for bankruptcy using the wrong chapter can have undesirable and potentially far-reaching consequences. First, you may be ineligible, meaning you won’t receive the debt relief you urgently seek. You may also miss out on opportunities for a quicker debt discharge and significantly impact the efficiency of the bankruptcy process.
Transferring assets before filing for bankruptcy
People often try to hide or move assets to prevent them from being included in the bankruptcy process. However, it is a potentially disastrous mistake that can have severe legal and financial consequences. Transferring assets prior to filing for bankruptcy can lead to criminal penalties, asset recovery and even a dismissal of your case, as it is considered fraudulent behavior.
Not planning for life ahead
It’s crucial to have a post-bankruptcy plan in place as you look to get your money matters in order when filing for bankruptcy. Otherwise, you may find yourself in a similar situation again. Rebuilding your credit, establishing a budget and working on improving your financial habits are essential to help ensure that you don’t repeat past mistakes.
Ignoring the need for legal guidance
Bankruptcy is a significant decision that requires careful consideration and an informed evaluation of your unique circumstances and objectives. As such, it’s in your best interests to seek qualified assistance to help ensure you make well-thought-out decisions and do the most with this opportunity for a new beginning.