Bankruptcy is a legal process that allows individuals or businesses to eliminate or repay some or all of their debts. It can offer financial relief and peace of mind. But if your commit any of the most common bankruptcy mistakes, you’ll complicate your situation.
The bankruptcy process is not without its challenges and potential mistakes. Even if it’s right for you, it’s important to make sure everything goes smoothly and your case is handled in the best way possible.
If you are considering bankruptcy, it is important to be aware of the potential mistakes that can be made so that you can avoid them. Some of the most common mistakes include:
1. Not Hiring a Bankruptcy Attorney
Many people believe that they can save money by handling their bankruptcy cases on their own. For many, this is a mistake. Without the guidance of an experienced attorney, you may make mistakes that could cost you thousands of dollars.
2. Filing for the Wrong Type of Bankruptcy
There are two main types of bankruptcy – Chapter 7 and Chapter 13. Each type has different requirements, and it is important to file for the type that best fits your situation. If you do not, you may end up having to repay some of your debt. Or you may not be able to discharge all of your debt. This is a common bankruptcy mistake.
3. Not Disclosing All of Your Assets
You must list all of your assets when you file for bankruptcy. You face potential fraud allegations by failing to do so. This means the court could dismiss your case.
4. Not Meeting the Income Requirements
There are income requirements that must be met to qualify for bankruptcy. If your income is too high, you may not be able to file for Chapter 7 bankruptcy. An attorney helps you assess your income and determine which chapter bankruptcy is best for you. This helps you avoid one of the most common bankruptcy mistakes.
5. Failing to Comply with the Bankruptcy Code
There are many requirements that must be met in order to successfully file for bankruptcy. If you do not follow these requirements, your bankruptcy case could be dismissed.
6. Discharging Tax Debts
In general, the bankruptcy court won’t discharge tax debts. There are a few exceptions to this rule, but it is important to know that you may still owe taxes even after you complete your bankruptcy.
7. Filing for Bankruptcy Too Many Times
You are only allowed to file for bankruptcy once every eight years. The court might dismiss your case if you file too soon after your last bankruptcy case.
These are just a few of the most common bankruptcy mistakes that you could make if you try to handle your bankruptcy case on your own. It is always best to consult with an experienced bankruptcy attorney to ensure that you are taking the right steps to protect your interests.