Mistakes to Avoid While Filing for Bankruptcy

by Mohajer L. Family Law Attorney Arcadia, CA

Bankruptcy is a powerful tool that helps good people to get back on their feet. It is a set of federal laws and rules in place for helping businesses and individuals who owe more debt than their capability to pay. While filing for bankruptcy, nobody wants to make accidental or innocent errors that could hurt the bankruptcy case.

Those who are not familiar with the process of bankruptcy often think that the bankruptcy court will sell all they have, which is known as “liquidation.” But a few cases are such in which liquidation is just a part of the bankruptcy. Hiring a professional bankruptcy attorney helps to know the options for keeping the property while receiving the bankruptcy benefits. Hiring a lawyer helps to avoid the mistakes that one can make while filing for bankruptcy. It is important to avoid mistakes for keeping the bankruptcy process easier. The mistakes that one should avoid while filing for bankruptcy include:-

Failing to disclose the assets:-
Many people do the mistake of not disclosing all of their assets while filing for bankruptcy. For an honest debtor, the goal of bankruptcy is a discharge of her/his debts. So for achieving the goal, it is very important for each debtor to be honest. While preparing the bankruptcy documents make sure that you are listing all of your assets. Deliberately hiding any of the debts, or forgetting to disclose them, create problems as the case of bankruptcy progress and also results to delay in the case. This action is also considered an attempt to commit fraud.

Filing the wrong type:-
Many people unknowingly file for the wrong type of bankruptcy. It is important for each debtor to determine that for which type of bankruptcy they should file. Picking the wrong type of bankruptcy lead to lose property that the debtor wants to save. This also increases the chances of not qualifying to file for the other. Filing the wrong type of bankruptcy can also result in the dismissal of the case, as well as failure to get a discharge.

Not considering other options:-
One of the biggest mistakes that debtors generally do is not considering the other options besides bankruptcy. It is not important that bankruptcy will be the best option for all. As for many debtors, it is not. To avoid any mistake, it is important to consult an expert, to guide you the best as per your financial situation. Hiring a lawyer helps to know that either bankruptcy is the right option for you or you should look for any other option.

Filing before the right time:-
Filing for bankruptcy before the right time is another mistake that a debtor must avoid for the smooth running of the bankruptcy process and good results. Before filing for bankruptcy, one must review all of the options. Having a comprehensive understanding of the options helps to make an informed decision that either bankruptcy is perfect for you or not.

Incomplete documents:-
Submitting incomplete documents to file for bankruptcy is another mistake that one should avoid. When you choose to file bankruptcy by yourself, it becomes your responsibility to submit all the necessary documents. However, this responsibility and stress linked with it decrease by hiring an experienced bankruptcy attorney. Having an attorney by your side helps to avoid the risk of missing any local form. An attorney with good experience in bankruptcy knows all the requirements and guides the best. Your attorney will be able to explain to you the bankruptcy process and laws and will also help you to assess your current financial situation.