3 Common Bankruptcy Mistakes to Avoid
Bankruptcies are a lot more common than you might expect, and 97% of bankruptcies in 2014 were personal, with just three percent pertaining to business. There are a lot of things you probably don’t know about the process. For instance, bankruptcy filers must pay a filing fee. In a Chapter 7 case, the fee is $335. For a Chapter 13 case, the fee is $310.
It can be easy to accrue a lot of debt — the average American home has 13 payment cards and the typical credit card purchase is 112% higher than if using cash. Bankruptcy is one way that people are able to restructure their debt if they find themselves struggling. Make sure to avoid these common mistakes during your bankruptcy:
Don’t Run Up Your Credit Cards
If you feel like giving up — don’t give up on your credit. Many who find themselves deep in debt think that spending more won’t really matter, but it does and it will. Certain debts accrued 90 days before filing bankruptcy are not dischargeable, so it is an extremely bad idea to take out more loans if you know that you’ll be filing for bankruptcy.
Don’t Cash in Your Retirement Account
In times of desperation, it might seem like a wise decision to liquidate all of your assets yourself — not so, however. Most retirement accounts are protected, and liquidating these accounts will more likely hurt you in the long run rather than help you keep the sea of debt at bay.
Don’t Hide Your Assets
When it becomes clear that a person will have to declare bankruptcy, many people think they can evade the seizure and liquidation of their assets by transferring them to family members or friends. Not so. In fact, if a bankruptcy trustee finds that you have done this, they will be able to reverse a transfer. Plus, it is unnecessary, because many things like homes and cars are often protected.
Think about bankruptcy laws as a way to start over, with your debt managed and restructured, and not as a way to escape responsibility. The point of the procedure isn’t to seize all of your property, but rather to help you. Partner up with a bankruptcy lawyer to get the best results possible.