A bankruptcy filing can bring a substantial amount of stress, but many people misinterpret the purpose of the law and believe they’re signing away their financial future. However, bankruptcy often provides filers with a chance to rearrange their finances as it allows them to liquidate their assets. With these facts in mind, below are several mistakes to avoid during bankruptcy.
Choosing the Wrong Chapter
Anyone considering bankruptcy should know there are multiple types. Chapter 7 is what most imagine when they think of bankruptcy. It liquidates the debtor’s assets to repay debts. Chapter 13 is a less well-known version that gives the individual a chance to reorganize debts and form a repayment plan to gradually pay creditors.
Giving Away or Selling Assets
If one considers filing a bankruptcy, selling assets before filing or adjudication can have severe legal consequences. In some cases, it can prevent filing altogether. From the moment one considers filing for bankruptcy protection, they should consult a bankruptcy attorney and avoid making major decisions.
Making One’s Own Arrangements
Making unauthorized distributions or arrangements during or before a bankruptcy can leave one vulnerable to legal sanctions. The point of bankruptcy is to give one access to the court process and to allow the judge to bring the case to a successful resolution. Making outside arrangements with creditors and others will only delay or stop the process.
Handling Other Legal Matters
An attorney will remind a client that bankruptcy puts a stay on all financially-related legal cases. Plaintiffs cannot advance litigation, enforce orders, or execute judgments if one has filed bankruptcy. They must petition the court before any actions can proceed. Clients should not entertain these cases but they should work with the bankruptcy attorney to bring the case to an end.
Failing to Disclose Debts and Assets
It’s important to account for every dime during a bankruptcy case. Clients should not, under any circumstances, attempt to conceal assets or lie to the court regarding their finances. Doing so can lead to severe criminal and civil consequences.
During times of financial hardship, according to legal counsel, bankruptcy is a viable and frequently-used option. Filing for bankruptcy is hard enough without a client who makes things more difficult. Clients should listen to the lawyer with website, and following the rules can allow one to emerge from bankruptcy stronger than ever.
