Money Mistakes Part 1: When Filing For Bankruptcy
Money management can be tricky business, especially when it comes to resolving debt issues. Most people know very little about the bankruptcy process and many are unaware of some common mistakes that could jeopardize their chances at a fresh start following a bankruptcy. If you are considering filing for bankruptcy it is important to work with bankruptcy lawyers in Sacramento to ensure you avoid these costly, common mistakes:
- Procrastinating. The line between being in debt and being in debt default is fine and waiting too long to meet with a bankruptcy lawyer may give your creditors an opportunity to seize your assets. You could face wage garnishment or a bank levy, making your situation worse. Be sure to seek help at the first sign of trouble such as missing payments, being behind more than 30 days on a payment, or receiving a letter of collection from a creditor.
- Tapping into savings. When debt problems begin to worsen many people will use money from their IRA or 401K plans to repay their creditors in efforts to avoid filing for bankruptcy. However, your bankruptcy lawyer can attest that assets are often exempt from the bankruptcy process and cannot be used to satisfy a debt. So why would you want to use these hard earned funds to pay a creditor when you could resolve your debts and keep these assets?
- Racking up debt on purpose. Some people make this mistake unknowingly when they charge up purchases on items in the months leading up to a bankruptcy filings. Other people make this mistake on purpose thinking they can get away with buying a few items they inevitably won't have to pay for. Regardless of the intention of new debt in the 3-6 months prior to a bankruptcy filing, you will likely find that the court will not accept these purchases into the debt that is considered dischargeable in bankruptcy.
- Hiding Information. The bankruptcy court asks a lot of questions about your financial affairs including your income, savings, retirement accounts, property value, value of assets and any additional items of value. This is to give the court a clear picture of what, if any, of your items could be used to satisfy a debt. In fear of losing too much, some people attempt to lie about or hide information regarding their funds and income. This is considered fraudulent and could leave you facing serious consequences.