Common Bankruptcy Filing Mistakes

Filing for bankruptcy can feel defeating, but it does not have to be totally devastating. Everyone falls on hard times at some point, but with the right help, you can turn your financial situation around. Filing for bankruptcy can be tricky however - most people don’t know anything about the filing process, and it can be difficult to navigate without help. 

There are some common mistakes that people tend to make when filing for bankruptcy, but you can learn from those mistakes with a little help and knowledge. Avoid these common bankruptcy filing mistakes to get your finances back on track sooner.

Common Bankruptcy Mistakes to Avoid:

1. Waiting Too Long to File
2. Hiding Assets
3. Not Listing All Creditors
4. Filing Under the Wrong Chapter
5. Not Following Local Bankruptcy Rules and Requirements

Waiting Too Long to File

If you’ve found yourself reading this, you’re on the right track. Many people in debt wait too long to seek help and being filing proceedings. While bankruptcy can be a tough thing to face, it is ultimately in your best interests to deal with it sooner rather than later. Living in denial and letting your debt continue to pile up will only leave you worse off. Know the signs of bankruptcy.

Once you know that you’re in financial trouble, meet with a bankruptcy lawyer. Many will provide a first consultation for free, and you may happily learn that you don’t have to file for bankruptcy yet. Meeting with a lawyer sooner could save you from falling deeper into debt, and they could offer alternatives to filing for bankruptcy that might not be available if you wait too long. If you don’t know a bankruptcy attorney, ask friends or family or simply search for one within your area with a quick Google search like “Philadelphia bankruptcy lawyers”. Be sure to read reviews and find the best help you can find.

Hiding Assets

It can be tempting to hide some assets or transfer some to a family member to save them in the bankruptcy process. This constitutes bankruptcy fraud, and absolutely must be avoided. It’s not worth jeopardizing your finances further or even your future if you receive criminal charges for fraud. Be totally honest with your attorney and when listing assets, and be sure to include all bank accounts, property, and valuables that should be included. 

Not Listing All Creditors

Another common mistake that people make when filing for bankruptcy is failing to list all of your creditors and debts. Again, this is against the law, and must be avoided. It’s vital that you are totally transparent about your debt and assets when filing for bankruptcy. Whether you forget a creditor due to disorganization or because you want to keep certain debts out of your bankruptcy case, it’s not worth putting your filing and finances at further risk.

Filing Under the Wrong Chapter

Bankruptcy filings can be confusing, which is why we recommend consulting a lawyer. If you file on your own, there are various pitfalls, one of which is filing under the wrong bankruptcy chapter. Individuals typically file under either chapter 7 or chapter 13. Depending on your income, your debt, and other factors, you may be eligible for one or the other. Research the difference between chapter 7 and chapter 13 bankruptcy and make sure you make the right choice for your situation.

Not Following Local Bankruptcy Rules or Requirements

Different bankruptcy courts have different rules and procedures you must follow, as well as different documents you must submit. Failing to follow local rules could delay your case or have it thrown out. There are also credit counseling and debtor education classes that must be completed depending on your case and court. All procedures must be followed and requirements must be completed, or your case could be in jeopardy.