For those who are facing an overwhelming amount of debt, filing bankruptcy can be a fresh financial start. Bankruptcy allows the individual or the company to streamline their financial flow and at the same time clean the whole financial mess. However, it is also true that you need to go through complex legal processes.
Although many debtors know about Bankruptcy, they don’t know about bankruptcy law and its proceedings. This welcomes unnecessary mistakes that lead to bankruptcy complications. This article will discuss a few of those mistakes.
What Is Bankruptcy?
Before we can start with the mistakes, here is a small explanation of Bankruptcy for those of you who are hearing about the term for the first time.
Bankruptcy is a legal procedure followed when an individual or a company faces a financial crisis and is unable to pay their debts. Bankruptcy allows the debtors to have a fresh and clean start.
Depending on your situation, you could fall under the following bankruptcies.
- Chapter 7: It mostly deals with individual Bankruptcy.
- Chapter 13: It is when the debtor is earning a regular income.
- Chapter 11: It is for the organization to streamline its debt structure.
- Chapter 9: It is used for municipalities and political subdivisions.
- Chapter 12: For the Family farmer and family fishermen.
- Chapter 15: It is filed by foreign debtors.
Critical Mistakes To Avoid While Filing Bankruptcy
If you have made the decision to file Bankruptcy, you must be aware of the mistakes you need to avoid. If not, lucky you, as we have listed down the critical mistakes, one should avoid at all cost.
1. Waiting Too Long To File Bankruptcy
It is good that you are hopeful about your current debt situation and believe that you can pay up your debt with hard work. However, at the same time, you must see your situation more realistic. It might be that your optimism is covering the reality, making you wait too long to file for Bankruptcy. The earlier you understand your situation, the better it will be for your bankruptcy case.
2. Failing To Consider Bankruptcy
Unfortunately, many bankruptcy myths are surrounding the whole concept of the procedure. For example, most people think filing bankruptcy will ruin all their hard-earned credit for the good, and they will no longer be eligible for any loan. But trust me, this is nothing more than a misconception. Bankruptcy’s sole purpose is to allow the individual a fresh financial start.
3. Adding More Debt Before You File
If you have decided to file for Bankruptcy, stop using your credit card. After all, the last thing you would like to add more credit to is your Bankruptcy. Some people think they can use the money right before filing Bankruptcy since the debt will be discharged anyway. Wrong! If the bank finds you engaged in bankruptcy fraud, the newly acquired debts will not be discharged.
4. Failing The Necessary paperwork
Filing for Bankruptcy is a complex process. There are several documentation processes where you need to be vigilant about and submit everything on time. If the necessary documentation is not filed, it could result in the dismissal of the case. Hence, hiring a lawyer becomes crucial.
5. Not Using The Exemption Properly
When filing a property, certain properties can be exempted. While some states allow the individual to choose a certain property, some states exempt the property necessary for living. Even so, you must understand which property can be exempted to better utilize the exemption procedure.
Here are a few properties that can be added to the exemption list.
- Auto vehicles.
- Retirement accounts.
Filing For Bankruptcy
Are you considering filing bankruptcy? If so, do not hesitate to hire an attorney that will help you guide you through the process. However, you must understand that filing a bankruptcy is a complex process; one simple mistake makes the whole process a mess. With that being said, contact Chapter 7 Bankruptcy in GA for any help and counseling