Bankruptcy can protect and help borrowers who are struggling with unaffordable debts. However, there are certain pre-filing mistakes that could hurt your chances of benefiting from bankruptcy. Avoid the following mistakes before your bankruptcy case is filed.
- Cashing out your retirement savings. Many retirement plans are protected in bankruptcy. It would be a mistake to use your retirement funds to pay off debts that would be discharged at the conclusion of your bankruptcy case.
- Going on a spending spree. You could get yourself into trouble by racking up new debts shortly before filing your case. Creditors could object to the discharge of the debts. You could be accused of fraud.
- Repaying family, friends or other creditors first. This is a potentially costly mistake. Repaying one creditor, even a family member, before other creditors could be viewed as preferential treatment. Your family member or friend could be ordered to pay this money back.
- Hiding assets. This mistake could make you ineligible for a discharge. It could also lead to criminal penalties. Hiding assets right before filing could be interpreted as bankruptcy fraud.
- Waiting too long to file. Your finances could continue to suffer damage if you wait to file for bankruptcy. Wage garnishments and other collection methods could put your finances into a worse situation.
Do I Need a Bankruptcy Attorney?
There are other mistakes you could make before and while filing. However, an attorney could help you avoid common filing mistakes. If you already have made a mistake, then an attorney may still be able to help your situation.
More can be said about number five on the list posted above. The last mistake we listed is also one of the most common. Some people wait too long to file bankruptcy because they do not have all of the facts on how it could improve their situations. Bankruptcy has a stigma. This stigma may keep people who could benefit from filing from even picking up the phone to speak with an attorney. In our experience, many people feel a sense of relief after they have spoken with our firm.
Filing for bankruptcy may help protect your most important assets while allowing you to discharge unaffordable debts. The Kansas City bankruptcy lawyers at The Sader Law Firm can discuss your options for debt relief. You may call us at (816) 281-6349 or you can fill out our online case review form.