It doesn't take much to lose control of your finances. You have a couple of missed payments, and suddenly, you're so far behind that you can't catch up. If your finances have spiraled so far out of control that filing for bankruptcy is the only option, take the time to do it right. Bankruptcy is a viable option for getting out of debt and giving you the fresh start you need to get back on your feet. However, even a small mistake during the process can delay or even stop your bankruptcy proceedings. Here are three steps you should take to avoid making problems when filing for bankruptcy protection.
Seek Legal Advice
If you're going to be filing for bankruptcy protection, the last thing you want to do is go it alone. Bankruptcy laws are complex and confusing. A bankruptcy attorney will be able to explain the laws and how they apply to your specific situation. They'll also be able to ensure that you file for the right protection. This is important, especially since there are two different types of personal bankruptcy chapters, Chapter 7 and Chapter 13, that you can seek protection through. Each one has different eligibility requirements.
Don't Hide Assets
When it comes time to fill out the paperwork for your bankruptcy, you'll be required to identify all of your assets. Depending on the type of bankruptcy you file for – Chapter 7 or 13 – those assets may be used to pay down your debt. One of the biggest mistakes you can make is trying to hide those assets. You might think that gifting your assets to family members or simply not disclosing them will allow you to keep them. However, if the bankruptcy court finds out about the hidden assets, you could face penalties, such as criminal charges.
Disclose All Debts
Only the debts that are listed on your bankruptcy paperwork will be discharged. That's why it's crucial that you disclose every debt. Once you file for bankruptcy, your creditors will be notified about the proceedings. From that point on, they will no longer be allowed to contact you regarding repayment efforts. However, if you've failed to disclose any debts, those creditors will still be allowed to continue with collection efforts. You can avoid being left with outstanding debt by taking your time to identify each debt you owe and each creditor you owe it to.
If you need to file for bankruptcy protection, make sure you avoid costly mistakes. The information provided above will help you navigate the process. If you have other questions about bankruptcy, be sure to speak to a bankruptcy attorney.