Three Mistakes to Avoid When Filing Bankruptcy

Once you decide that bankruptcy is the only way to get out of a financial bind, you should retain an attorney that you are comfortable working with. You will need to discuss your finances in detail, and your attorney will help you avoid mistakes when filing your bankruptcy. Here are three mistakes to avoid when filing for bankruptcy.

Transfer of Assets: Lying or Hiding Assets

Lying about assets or hiding assets are two mistakes, but we’ll cover them in one section since the outcome is the same. Since you have to list all your assets, some people decide to keep more than what the bankruptcy laws allow them to keep. They might lie about the assets or even “hide” them by selling them or giving them to someone else to “hold” for them.

The bankruptcy laws have strict laws about when you can sell or give away before a bankruptcy. You can’t just plan on filing bankruptcy one day and execute it. You have to prepare for it, so you don’t get bitten by the wasting assets rule.

Misleading Your Attorney: Lying About Your Assets

Your attorney can only file the bankruptcy schedules with the information you give. Suppose you mislead or lie to your attorney about your assets. In that case, you are committing fraud in the bankruptcy court since the attorney uses that information to create the petition, schedules, and other documents required in a bankruptcy filing. Many of the documents filed as part of your bankruptcy require your notarized signature.

Running Up Credit Card Debt and Taking on New Debt

Sometimes people have credit cards with credit left on them. They figure that the credit cards will be included in the bankruptcy and will spend the remaining credit. You have to attend a meeting of creditors, a 341 meeting, where a creditor can object to being included in the bankruptcy. If you run up credit card debt, the creditor could ask the court to exclude the amount you ran up from the bankruptcy.

Finally, the creditor could have debt excluded if you file bankruptcy within a certain amount of taking on new debt. For example, take out a personal loan to use for home repair and maintenance. The creditor could ask the bankruptcy court to exclude that new debt since it looks like you took out the debt knowing you were going to file bankruptcy and get away with paying some or none of that debt.

Contact a Bankruptcy Attorney

If the court finds out you are hiding assets, that you ran up credit card debt, or that you took on new debt just before filing for bankruptcy, it could exclude those debts or dismiss it entirely. To prevent a delay or a dismissal in your bankruptcy, contact an experienced bankruptcy attorney at SM Law Group, APC, to consult and learn more about your rights as a debtor.

If you are looking for ways to get debt-free, don’t hesitate to contact us today through our website or give us a call at to schedule your free consultation.