Filing for Chapter 7 bankruptcy is a great way to get out of debt and give you a fresh start financially. However, it’s essential to understand that filing for bankruptcy can be complicated, and avoiding critical mistakes jeopardizing your bankruptcy is necessary.
We’ve seen numerous mistakes, especially when people try to file for bankruptcy independently and do not hire a bankruptcy attorney. Here are some of the top ways to avoid common Chapter 7 bankruptcy mistakes.
Understand ALL the Eligibility Requirements
To file for Chapter 7 bankruptcy, you must first qualify to file for it. To do this, you must pass a test. Relax – it’s nothing you need to study for. This means test assesses your financial situation to determine if your income falls below the threshold required to file for Chapter 7 bankruptcy. If you don’t pass the means test, it doesn’t mean you cannot file for bankruptcy. Instead, it means you must file for another type of bankruptcy, like Chapter 13.
Disclose All Assets
When filing for bankruptcy, you must list all of your assets. This includes telling the court about your bank accounts, property, vehicles, investments, and other assets. Failure to disclose all assets can get you in a lot of trouble with the court and jeopardize your bankruptcy.
Don’t Make Large Purchases Before Filing for Chapter 7 Bankruptcy
When you know you’re going to file for bankruptcy, it can be tempting to make a large purchase before filing—knowing that it will likely be discharged during your bankruptcy. You also might be tempted to transfer assets to your family members or loved ones to protect them from liquidation. These are both bad ideas and fraudulent. Doing this can result in penalties and can delay your bankruptcy proceedings.
Take the Required Credit Counseling Course
One of the requirements to file for Chapter 7 bankruptcy is to complete a credit counseling course. This is not optional. You must complete this class to file for bankruptcy. It’s not only court-ordered but also beneficial, as it teaches you valuable tools for managing your finances after bankruptcy.
Create a Budget
Just filing for bankruptcy doesn’t guarantee financial freedom in the future. You also need to manage your money correctly. It’s essential to create a budget and stick to it to help you better manage your finances during and after bankruptcy.
Know Which Debts are Discharged
While most debts can be discharged during Chapter 7 bankruptcy, not all are eliminated. It’s essential to understand that taxes, student loans, and child support debts may not be discharged.
Hire a Bankruptcy Attorney
Chapter 7 bankruptcy can be incredibly complicated. This is not a process you want to handle yourself. You need to hire an experienced bankruptcy attorney. Attorneys have gone through the Chapter 7 process numerous times and are experts in bankruptcy laws. They will provide you with the expertise and advice you need, as well as help you file paperwork on time, and even represent you in court – if needed.
Learn from Your Financial Mistakes
During the Chapter 7 bankruptcy process, it’s essential to understand how you got into debt and take away some crucial lessons. You can create a budget, end bad spending habits, and make other changes to set yourself up for financial success in the future.
Let Us Help You
If you are considering filing for Chapter 7 bankruptcy, avoiding critical mistakes is essential. Let our lawyers at the Law Offices of Alexzander C.J. Adams, P.C. help. We work for you, the people, and not institutions. Contact us for a free case evaluation or no-obligation consultation. We are dedicated to helping you overcome this minor bump in the road and assisting you in getting on with your life.
