Common Bankruptcy Mistakes
Many people seek debt relief through bankruptcy each year. Bankruptcy can be a great tool for resolving unpaid debts and getting back on track financially. However, the process is highly detailed and there are a number of mistakes that can prevent you from obtaining a debt discharge. If you find yourself in a situation where bankruptcy is a viable option, it is critical that you work with a skilled and experienced bankruptcy attorney who will help you navigate the process and avoid these common mistakes.
1. Don’t Hide Assets. It is important to be honest with your bankruptcy attorney throughout the process. While you may be embarrassed to admit that you have been overspending or that you have lost your job, hiding assets or lying about your income can be detrimental to your case. Your attorney will need to review your financial situation and develop a plan to help you pay off your debts. If you do not disclose your full income or assets, your attorney will not be able to properly estimate your income and assets, and your plan may not meet your needs. In addition, undisclosed assets will prevent you from meeting the good faith element that is required for the court to approve your case.
2. You Must Comply with Court Procedures. Many people do not realize that bankruptcy is a legal proceeding. If you fail to follow the procedures and rules set forth by the court, your case may be dismissed. For example, you must disclose all of the real and personal property that you own and provide information regarding your job or business. You also will need to attend court hearings and serve notices to your creditors. If you fail to do any of these things, your case may be dismissed.
3. Don’t Forget to File a Chapter 13 Plan. Chapter 13 bankruptcy is a good option for those with a steady income who want to keep their assets and pay off certain debts over time. While Chapter 7 bankruptcy results in a complete debt discharge, Chapter 13 bankruptcy is a more complicated form of bankruptcy that allows you to pay debts that you choose to pay. However, many people who file for Chapter 13 bankruptcy fail to file a plan and end up losing their case and needing to start over. If you hire a bankruptcy attorney, he or she will help you develop a plan and file it with the court. If you want to avoid this mistake, you will need to work with a knowledgeable attorney who will help you navigate the process.
4. Failing to Keep Up with Payments is Fatal to Your Case. If you want to receive a discharge of your debts in a Chapter 13 bankruptcy, you will need to make a certain number of payments. These payments are based on your income and the amount of your debt. If you fail to make these payments, your discharge will not be available to you and you will be responsible for repaying your creditors. The bankruptcy court can take your financial situation into consideration if you fail to make payments. If you cannot keep up with your payments, a Chapter 13 bankruptcy may not be the best option for you.
5. Failing to Stay Current on Your Debt Can Result in Creditor Action. If you fail to make your payments on time, your creditors may take action against you. In addition, your creditors may file a complaint with the court during the bankruptcy process. If you fail to respond to these complaints, the court may dismiss your case. If you are considering bankruptcy as a way to resolve your debts, it is critical to work with a Sacramento bankruptcy attorney who will help you avoid these common mistakes