After days or weeks of soul searching, financial restructuring and harsh realizations about your spending, you've decided to file for chapter 7 bankruptcy. You're nothing close to a money wizard or bankruptcy attorney, so you're not sure what to do, or more importantly not do, next. Before you begin the process of filing for bankruptcy, here are three of the worst mistakes and decisions to avoid:
Lying About Your Finances
Once you decide to file for bankruptcy, all the lawyers, court officers and just above everyone you come into contact with will be going through your past and finances with a fine toothed comb. This is why it's vital that you are completely transparent about your finances. Lying or omitting any debts, assets or sources of income isn't only suspicious, it's also illegal.
For example, if you have a bank account you only use for holidays or to pay your child's school fees, don't leave it out of the information you file, even if you think the amount is too small and insignificant to matter.
While filling out all that paperwork, don't hesitate to ask your attorney about any sections or lines that do and do not apply to your situation. If you aren't sure and you go ahead and skip a section about your finances, you might wind up with a hefty fee, or worse, being denied the bankruptcy all together.
After doing the research and learning just how expensive it can be to file for bankruptcy, you've decided that the most logical way to save money is to represent yourself. After all, filing for bankruptcy is just about filling out a bunch of paperwork, right?
Not seeking representation and counsel during this long and sometimes confusing process is one of the biggest pre-bankruptcy mistakes you can make.
If you're still not convinced, it's important to note that depending on the complexity of your financial past, in addition to dealing with your state's laws and the national bankruptcy laws, you could have to get into contact with the Internal Revenue Service, as well.
Even if you're struggling financially and don't think you can afford good representation, realize there are several lawyers out there who are willing to work with you to ensure you get through this messy process, and on with your life.
Piling On Additional Debt
Finally, people who are already in dire financial trouble and are considering bankruptcy sometimes decide to make their situation just a little worse by taking on more unnecessary debt. This could be anything from running up a credit card on a lavish vacation, or taking out a new loan to pay back friends and family members.
If you take on any type of debt that you have no means or plan on repaying, not only will it put your ability to successfully file for bankruptcy into doubt, it is actually very illegal, and could end up with you paying a huge fine or worse, in jail.
Instead, if you are filing for bankruptcy in the near future, the best way to ensure your actions are not put into question is to live your life as you have, and skip that yearly vacation!
According to the website Debt.org, the number of Americans filing for bankruptcy each year has been going up over the last hundred years. If you're amongst this large-growing number of everyday, hard working people, don't make any of the above-mentioned mistakes – especially when it comes time to hire an attorney. Instead, be upfront and honest and most importantly, take a deep breath and prepare to repair your finances.
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