As a last resort for individuals going through financial strain and are unable to manage their debt on their own, bankruptcy carries many pros and cons. When all other options have been exhausted, people turn to bankruptcy as a way to get a new financial start. If bankruptcy is right for you, it could drastically improve your financial dilemma. However, the wrong actions can make your situation even more complicated. Know these key mistakes to avoid if you are thinking of filing for bankruptcy.
Using Your Credit Card
Running up your credit card is a key mistake to avoid if you are planning to file for bankruptcy. Some people are tempted to go on shopping sprees or make a big purchase just before they file. In the court’s eyes, this is a big mistake and implies that you are being irresponsible with your money. When creditors are notified that you made such payments, they may believe that you are committing fraud.
Transferring Money or Property
One critical mistake people should not make before filing for bankruptcy is transferring their money to family members or friends. It is illegal to do, so you could face prosecution for attempting to transfer assets to anyone in order to protect them.
Liquidating Retirement Savings
You want to hold on to your retirement or 401(k) savings because taking them out of your accounts can do more harm than good. Out of fear, some people try to liquidate their retirement in order to salvage their situation. Retirement accounts are exempted in a bankruptcy proceeding so they will not be affected. If you remove them, you may take even longer to recover after the bankruptcy process is complete.
Postponing a Legal Consultation
Most of the time, people simply don’t seek legal help when they could greatly benefit from it. To get a complete understanding of your options and learn whether bankruptcy is the best solution, you should talk to a bankruptcy lawyer right away. There may be other alternatives that are better suited for your particular situation.
A bankruptcy lawyer like one from The Law Offices of Neil Crane can tell you more about what not to do if you are planning to file for bankruptcy as a solution for debt relief. For more mistakes to be aware of, schedule a consultation with a seasoned bankruptcy lawyer who can give you crucial legal advice so that you can go through the bankruptcy process smoothly.