Those with substantial debt often come to the sensible yet difficult conclusion that they need to file bankruptcy. Whether it is restructuring under Chapter 13 or the liquidation of Chapter 7, this realization is the first step to starting on the path of financial independence. The next is to do it the right way without making these common yet avoidable mistakes.
5 errors debtors often bring upon themselves
An individual or family’s circumstances will vary, but debtors should avoid these whenever possible:
- Not listing all the creditors: It can seem like there are too many to count or some that are more urgent than others, but it is essential to make a comprehensive list.
- Hiding assets: It may be tempting to hide cash or give friends and family assets to hold onto temporarily, but it is against the law and could put the discharge at risk.
- Repaying only certain creditors: Showing preferential treatment by paying off certain creditors (or even family) but not others can lead those paid to return the money to the trustee in charge of the bankruptcy.
- Going on a buying spree: Credit card debt ran up just before filing bankruptcy is less likely to be discharged. The debtor is better off putting their cards in a drawer or cutting them up.
- Waiting too long: Many carry debt long after realizing there was no other solution, thus creating a larger debt with a more difficult recovery.
Help is available
Debtors who file bankruptcy face some confusing paperwork, and they need to make important decisions about their recovery. A bankruptcy attorney working here in central Florida can help the debtor make the right decisions and avoid mistakes. These professionals can also file the paperwork and stop the harassing calls, visits or messages from debt collectors.