What happens if you pay student loans with credit cards then file bankruptcy? It’s important to avoid this and other common bankruptcy mistakes.
Students often make mistakes when filing for bankruptcy. They’re young and usually don’t have a lot of experience with financial matters.
Some mistakes aren’t a big deal, while others cause financial damage for years on end.
What mistakes should you avoid when filing for bankruptcy? Here are six of the biggest:
Choosing to Pay Student Loans with Credit Card Then File Bankruptcy
If you choose to pay your student loans with a credit card then file bankruptcy that can get you into trouble.
The court might even consider this fraud.
Anyone filing for bankruptcy must disclose all of their financial information, including recent financial transactions. If you pay student loans with credit cards then file bankruptcy, the court could dismiss your case. This means you’ll be stuck with the same amount of debt – only now with a much higher interest rate – and you’ll no longer have bankruptcy as an option.
Covering the occasional monthly student loan payment with a credit card isn’t financially savvy, but it won’t get you into legal trouble. But using a credit card to pay off credit cards then filing for bankruptcy can get you into trouble.
Not Seeking Legal Help
This is a big one – many students try to file for bankruptcy on their own, without understanding all of the complex rules and regulations involved. This can lead to mistakes that can jeopardize your case.
It’s always best to seek legal help from a qualified bankruptcy lawyer.
Waiting Too Long to File
If you wait too long to file for bankruptcy, you might lose out on some of your benefits.
For example, you might not be able to discharge your student loans if you file after a certain number of years have passed since you stopped attending school.
Putting off dealing with your issue and using quick fixes to resolve your financial issues is a mistake. This includes keeping up with debt payments by using credit cards. If you pay student loans with a credit card then file bankruptcy, you’re putting your bankruptcy case at risk.
Hiding Your Assets
When you file for bankruptcy, you’re required to list all of your assets. If you don’t disclose everything, the court could rule that you’ve committed fraud and dismiss your case.
Although it might be tempting to avoid mentioning an asset when you file, this puts you at risk. You’ll get the best bankruptcy results when you’re open and honest when you file.
Choosing the Wrong Chapter of Bankruptcy
There are several types of bankruptcy. The two most common used by consumers are Chapter 7 and Chapter 13.
Not everyone qualifies for both types of bankruptcy. Even if you do qualify for either, it’s still important to file for the one that best suits your needs. Filing for the wrong type can lead to delays or problems with your case.
Failing to Follow Through
Bankruptcy is a complex legal process and it’s important to follow all the steps exactly as they’re outlined. Missing a deadline or not completing a required step can lead to problems with your case.
By avoiding these mistakes, you’ll increase your chances of a successful bankruptcy filing.
The last thing you want to do once you decide to take action and deal with student loans through bankruptcy is a make a mistake that could jeopardize your case.
Should You Pay Student Loans with Credit Card then File Bankruptcy?
In most cases, paying student loans with a credit card is a mistake. But it’s important to speak to an attorney about your situation if you’re struggling with debt and considering bankruptcy.
Whether it’s choosing to pay student loans with credit card then file bankruptcy, hiding assets, or failing to contact an attorney, you’ve got too much at stake to make a mistake. If you’re considering bankruptcy, be sure to speak with a qualified lawyer to get advice specific to your situation.