4 Bankruptcy Pitfalls to Avoid
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4 Bankruptcy Pitfalls to Avoid
Bankruptcy doesn’t have to be terrifying. Done right it almost starts to seem a little banal. Your lawyer will tell you to take a step or sign a document. You’ll do it. The process will continue until you get your discharge.
However, there are ways to add mountains of additional and unnecessary stress to the bankruptcy process. Here are four you should avoid at all costs.
Failing to disclose all your assets.
It should seem obvious, but people get funny when it comes to money. They let fear take over. They’re not sure the courts are going to leave them enough to live on. So they start giving assets away planning to take them back later. Or they ‘forget’ to list them.
But the premise of bankruptcy only works if every case includes a fair assessment of the debtor’s circumstances. A thorough understanding of what you have and what you don’t. You might not lose anything by doing so. A great deal of property is covered under federal bankruptcy exemptions. You might lose more than you’d like, but you get something for your trouble. A fresh start. Creditors get off your back. Your credit score might even go up.
By contrast, if you fail to disclose you’ll probably find yourself going to jail for fraud.
Failing to disclose all your debts.
Some clients believe it’s harmless to avoid listing debts. For whatever reason, there are some debts, usually to family members, they don’t want to discharge through bankruptcy.
But one of the number one reasons bankruptcies get challenged is evidence surfaces that debtors are favoring creditors over one another. Why should one creditor get paid back when the others suffer? This, too, can get you jailed for fraud. This is the reason why you shouldn’t try to pay off a bunch of debt before you file, too.
Keep in mind nothing stops you from paying back every penny of a debt once the discharge is complete. If you owe your Aunt $30000 you can discharge the debt through bankruptcy and voluntarily pay it anyway. You just have to do it later. Way later. After matters are already resolved.
Failing to share your full situation with your bankruptcy attorney.
Bankruptcy is like any other legal matter. It requires some strategy. Much depends on your circumstances. Do you pass the means test for Chapter 7 bankruptcy? How much do you care about keeping your car? How much money would really be available to pay creditors in a Chapter 13 plan?
If we don’t know your situation we can’t fight to get you the best outcome for your bankruptcy case. It’s just that simple.
Failing to get a bankruptcy attorney in the first place.
Less than 45% of pro se Chapter 7 cases resolve successfully, compared to a 95% success rate for attorney-represented cases. Fewer than 1% of pro se Chapter 13 cases have a successful outcome.
Plenty of clients fear they can’t afford a bankruptcy attorney when they come to speak to us. In reality, you can’t afford not to have a bankruptcy attorney. And because we’re well aware we’re dealing with individuals who are having financial difficulties we offer free initial consultations and fair payment plans.
If you’re considering bankruptcy, steer clear of the pitfalls. Contact the offices of Sadek and Cooper to schedule your free consultation today. After all, your individual situation may kick up a few more pitfalls we’ll want to tell you about.