Filing for bankruptcy protection can be a life-altering event that can turn your life around for the better. However, when debtors make the following mistakes, they can jeopardize their chances of achieving a successful bankruptcy and in some cases, even face legal consequences. If you want to have the greatest chances of a successful bankruptcy, we suggest you avoid making the following common bankruptcy mistakes:
Don't go running up your credit cards or taking out cash advances just prior to filing – While it may be tempting to max out your credit cards and withdraw all the cash that you can before you file bankruptcy, this is the last thing you want to do, and the bankruptcy court is aware of this common ploy. Certain debts that are accrued within a certain period of time (usually 90 days) before filing are non-dischargeable. This means that if you abuse your credit cards before you file for bankruptcy, you may be held liable for paying them.
Don't transfer your property to someone else's name – Some debtors think they can protect their property by transferring it to someone else's name before filing bankruptcy. If a bankruptcy trustee thinks you transferred property in an effort to shield it from your creditors, the trustee may be able to reverse the property transfer. This is often unnecessary since the bankruptcy exemptions may very well protect your residence, your automobile and family heirlooms.
Don't pay back personal loans to friends and family while ignoring your other creditors – The bankruptcy court considers that all creditors need to be treated equally, and without preference. If you choose to pay back a family member within a year prior to filing, the court may take legal action to recover that money from your friend or family member in order to distribute the money fairly amongst all of your creditors.
Don't withhold information from your attorney or the trustee – Lot's of people withhold information from their bankruptcy attorney in an effort to hide income, assets or property because they think their attorney won't understand or they will force them to reveal the information to the court. This is a very bad idea because without the proper information, your attorney can't effectively help you. Besides, if it is revealed that you withheld information, you could lose valuable assets, your bankruptcy case can be dismissed and you could possibly face criminal charges, which are not worth it. By providing your bankruptcy attorney with complete and accurate information, he or she can safely and effectively protect you and your best interests.
Don't procrastinate and delay filing – The numbers don't lie, if you have more money going out than is coming in, the debt is eventually going to spiral out of control to the point where you face charge offs, repossessions, judgments and foreclosure. If no level of tightening of the belt and budgeting can resolve your problem, then it's important to seek out and obtain bankruptcy information fast. If you don't react quickly and logically to an out of control debt situation, you could lose control and your sanity. The majority of people try desperately to manage their debt-load until it's too late, and most of them have no idea how to handle wage garnishments, harassing debt collectors, judgments and lawsuits, so they don't know what their options are or how to proceed forward. By contacting a bankruptcy attorney, you can minimize your losses and maximize your chances of gaining control of your situation sooner than later.
For more information about the "do's and don'ts of bankruptcy," please contact a Detroit bankruptcy attorney from the Law Offices of Marshall D. Schultz. Our attorney's have more than 33 years of combined bankruptcy experience and we have handled over 10,000 bankruptcy cases in Michigan. If you are looking for high quality legal representation, we are confident you have arrived at your destination!