Avoid These Mistakes When Filing For Bankruptcy
When done properly, bankruptcy provides you with a fresh start financially, and it can help you get back on your feet. Unfortunately, there are some common mistakes people make when they file. These errors can result in the court rejecting your bankruptcy petition, and they are expensive to correct. Before you file for bankruptcy, be sure to avoid the most common mistakes below.
Paying Down Debt with Retirement Funds or a Home Loan
For many people, bankruptcy is the worst thing that could happen to them and they will do just about anything to avoid it. Sometimes, people even take out a home equity loan or a home equity line of credit (HELOC), or they draw from their retirement savings just to pay down the debt. This is very dangerous. Home loans are secured with the property and so, if you default on the loan, you could face foreclosure. Retirement savings are also very difficult to rebuild and you may have to pay a penalty for withdrawing funds early.
Transferring Assets Prior to Filing
If you file Chapter 7 bankruptcy, your unsecured debts are discharged and in exchange, the trustee will sell certain assets of yours in an attempt to recover as much as possible to repay the debt. To avoid this, many people transfer, sell, or gift their assets to other people, but this is a mistake. The trustee will learn about the transfer of assets and will consider the act fraudulent. Even more, the trustee will attempt to retrieve the property to sell it, so any transfers made before filing are generally futile.
Failing to Include All Assets in Bankruptcy Paperwork
Like the above common mistake, you may be tempted to leave certain assets out of the bankruptcy paperwork so they are not taken as part of the process. Again, the court will likely learn about this and consider it an act of fraud. It is also illegal to lie to the court and you may face certain repercussions for it.
Going On a Shopping Spree Prior to Filing
Sometimes, when people know they are going to file bankruptcy and have their debt discharged, they go on a shopping spree, running up credit card debt they know they will never have to pay. In certain situations, the trustee may also find this action fraudulent.
If you buy over $675 in luxury goods or services in the 90 days prior to filing for bankruptcy, the trustee will consider those purchases as fraudulent. If you take out a cash advance of over $950 in the 70 days prior to filing for bankruptcy, the trustee will also consider this fraudulent.
Filing Without a Florida Bankruptcy Lawyer
Anyone filing for bankruptcy has already fallen into financial hardship and you may want to save some money by filing on your own, without the help of an Orlando bankruptcy lawyer. This is another mistake. At Anderson & Ferrin, our skilled attorneys will ensure you do not make any mistakes that could hurt your case, and will reduce a lot of the stress that comes with the process. Call us today at 407-412-7041 or fill out our online form to schedule a free consultation.