Filing for bankruptcy is a viable option to get out of debt and get back on a secure financial footing. When filing for bankruptcy, it’s important to avoid mistakes that may result in issues during the process.
Knowing what these mistakes are is the best way to file them during your own bankruptcy filing.
1. Being untruthful about assets
You must complete a means test when filing for Chapter 7 bankruptcy. In this, you are required to disclose all assets and income. This test determines what you can use to pay your creditors.
If you leave out assets on purpose to qualify, your bankruptcy may be dismissed. You may also be banned from filing bankruptcy for those debts again. Never lie about assets and income. Part of the process is a trustee accessing your financial records, which means these things will likely be found.
2. Giving assets away
When filing bankruptcy, giving assets away to family and friends is a red flag. You can’t give your stuff away and expect them to return it later to avoid filing the items on your bankruptcy. This is, in fact, illegal.
Giving your vehicle to someone in your family right before filing for bankruptcy will likely result in its loss once the bankruptcy trustee finds out. There are ways to maintain ownership of your vehicle when filing bankruptcy, so you shouldn’t try to hide it by giving it away.
Protecting your rights to file for bankruptcy
Making mistakes when filing for Chapter 7 bankruptcy can have serious repercussions. It is best to be honest, and follow the right steps to ensure that you have the best chance of the fresh financial start you were hoping to gain. Experienced legal guidance can help you steer clear of pitfalls.