There are times when your finances come crashing down, and before you know it, you find yourself unable to pay your debts. This is now a common dilemma many people have worldwide. When nothing seems to go according to plan and you are financially depressed, you may resort to filing for bankruptcy.
Various reasons lead to bankruptcy. Some have lost their jobs, had sky-high medical bills to pay, had uncontrolled credit use, and undergone marital dissolution. If you think that going bankrupt is your only hope of starting anew, then you must avoid the following mistakes:
Filing when it is already late
You may have second thoughts on filing for bankruptcy. But when it comes to such options, timing is everything. Waiting too long may put you at a disadvantage. You may end up getting your home foreclosed or your car repossessed if you wait too long before considering bankruptcy. Know your options. But the earlier you file for bankruptcy, the better and faster the process will be.
Filing pro se
This term refers to an individual’s choice not to hire an attorney when filing. While going bankrupt without an attorney is not impossible, it can be hard for you to complete the paperwork and handle all the stress that comes with the filing. Remember that such a process can be stressful, emotionally draining, and time-consuming. For instance, if you are going bankrupt for the sake of stopping your car from being reclaimed, then one of the best decisions you can make is to hire a competent repossession attorney in Salt Lake City.
Saying yes to preferential payments
The things you do before filing can affect your financial future. For example, you chose to pay off your existing debt to a relative. You may feel good about reducing your debts, but your bankruptcy trustee may classify it as a preferential payment. If this is the case, the trustee will not only disallow such an act. They will also make your relative repay the payment you made to the trustee.
Adding to your debt
You are already going bankrupt, so what harm can additional last-minute spending can do to your already tainted finances? But in reality, you may end up still having to pay for those acquired debts. In most cases, adding debt to your credit card will not be considered dischargeable, which means that you will be responsible for such debts.
“Forgetting” to list certain creditors
For a bankruptcy case, it is a must that you list all of the creditors you owe. It does not matter what your intention is or whether you plan on repaying them anyway after this chaos. You will only be putting yourself in greater trouble for not being honest with your list. So make sure to double-check your list. Do not forget to list every person or organization you owe.
Contrary to popular belief, being bankrupt can be the best way to reset your finances. It can even help you stop a lawsuit, improve your credit score, and avoid wage garnishments. You will find that such a step can do more good than harm to your finances. It may be a challenging process, but you can learn from the experience and find ways to make better financial decisions in the future. Of course, it pays to get the legal help you need and avoid bankruptcy mistakes to get the most out of it.