The Top 5 Mistakes Bankruptcy Filers Make
Filing for bankruptcy is complicated and stressful. You may be confused about what you are asked, or the state of your finances. This may lead you to be inaccurate or not thorough. And rumors and misconceptions about bankruptcy lead people to hide assets and not be upfront with their attorneys. All of this can lead to huge problems down the road. Below are the five biggest mistakes bankruptcy filers make when they file for Chapter 7 or Chapter 13 bankruptcy.
(1) Leaving Out Assets or Information. This is one that is done by accident and also with mischievious intentions. It is easy to just leave out information, and it is hard to tell whether those assets will be discovered. But in most cases, the trustee will discover those assets, and you will be in big trouble. You can lose assets you normally wouldn’t, and even face criminal charges. Remember, it is the trustee’s job to hunt down your assets, and he or she has a lot of experience doing it.
(2) Transfering Assets. It is tempting to give assets to loved ones or friends, so that the trustee cannot find them. But this can lead to serious problems as well, and such transfers are likely to be discovered.
(3) Lying or Hiding Assets. If you hide some of your possessions, or say some are not yours that are, you could face charges of bankruptcy fraud, and you can lose the protection bankruptcy affords. In one case, a man claimed his business was just the place he worked for, not a personally owned business. But the trustee discovered he owned it, and he lost all of the business assets and equipment.
(4) Filing the Wrong Type of Bankruptcy. This often happens when people file without representation, or they hire an inexperienced attorney. In one case, a woman was not told by her attorney that her business could be liquidated in her Chapter 7 bankruptcy, and she ended up losing everything she had. Make sure you hire the right representation.
(5) Paying The Wrong Debts. Make sure you do not pay family members, for instance, before you file for bankruptcy, and leave unpaid your other debts. This can cost you in bankruptcy.
Don’t make the above mistakes. Instead, be completely upfront and honest with your bankruptcy attorney, and find out what the best strategy would be for you, and what the consequences of each decision would be. You will end up in a much better position than if you make any of the above avoidable mistakes.