It may be intimidating to file for bankruptcy. However, it does not need to be a negative experience at all. If you need financial relief and follow all the bankruptcy laws, it can be a beneficial process.
A lot of people make costly mistakes during the bankruptcy process, but you do not have to follow in their footsteps. Take note of these common errors to avoid.
1. Being deceptive about your assets
To begin a bankruptcy case, you must report your income, assets and debts. You may feel a temptation to lie about your finances or hide assets, but this will only hurt your case. Not only will this result in the dismissal of your case, but you may also face criminal charges. The best thing to do is to be completely honest and transparent.
2. Building up credit card debt
When looking to discharge credit card debt, you may feel an urge to go on a spending spree, but this will not work. If you make non-essential payments on your credit card, your creditor may object to the elimination of that debt. You may end up owing your creditor for these kinds of payments regardless of your bankruptcy.
3. Giving assets to someone with the understanding you will get them back
In an attempt to preserve your assets, you may think you can give away property, cash, cars or other assets, only to receive them after your bankruptcy is final. This is dishonest and will not work. Always be truthful about the assets you own.
4. Raiding your retirement accounts
Do not make the expensive mistake of using your retirement funds to pay off creditors before declaring bankruptcy. Your retirement funds are off-limits when it comes to bankruptcy, so this has no benefit to you. Plus, you may get hit with early withdrawal fees and tax penalties.