Generally, people do not willfully walk themselves into financial difficulties. In fact, the average person does everything in their power to live within their means. Unfortunately, if you are overwhelmed by debt, one of the remedies you can consider is declaring bankruptcy.
Done right, bankruptcy can give offer you a fresh financial start. However, there are certain mistakes that you need to steer clear of while declaring bankruptcy. Here are some of these mistakes:
Attempting to hide assets
The decision to declare bankruptcy is a difficult one. When you choose to take this route, it is important that you are as forthright as possible.
Any attempt to hide assets (committing bankruptcy fraud) can only jeopardize your chances of discharging your debts if the court learns about your behavior. And besides the denial, this can also attract legal consequences.
Waiting too long to apply
Declaring bankruptcy at the right time can make a huge difference to your debt management effort. Unfortunately, one of the most common pre-bankruptcy mistakes people make is waiting too long to get started with the process.
If you are struggling to keep up with your financial obligations, and are not expecting things to get better any time soon, then you should consider the possibility of declaring bankruptcy.
Filing the wrong bankruptcy
Once it is clear that bankruptcy is inevitable, you need to begin researching your options in order to know the right type of bankruptcy for your situation.
Basically, if you are dealing with unsecured debts like medical bills, credit card debts and wage garnishment, then you are better off declaring Chapter 7 bankruptcy. However, if you are dealing with secured debts like a mortgage or car loan, and are looking to reorganize a payment plan, then Chapter 13 bankruptcy would make perfect sense for your situation.
If you are struggling with debt, and have made the decision to declare bankruptcy, it is important to understand the steps to take and the pitfalls to avoid.