6 Biggest Bankruptcy Mistakes A Lawyer Can Help You Avoid

Filing for bankruptcy is a major decision that all business owners do not take lightly. Bankruptcies are seen as a major failure and for some, it can be hard to recover after closing the case. While bankruptcy can be a devastating financial decision, there are more risks when it is done without the help of bankruptcy lawyers.

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Here are the most common and biggest mistakes people tend to make when filing for bankruptcy that their lawyers will never make:

Mistake 1: Stalling And Filing Too Late

While it can be intimidating to begin the process of filing for bankruptcy, it must be done as soon as possible. The longer you wait, the more debt you can incur and you may lose certain payment options, getting payments deferred, or even destroy personal relations due to outstanding debts.

Bankruptcy lawyers know exactly the right time to file for bankruptcy to ensure you don’t continue adding to debts and sabotaging your finances any further.

Mistake 2: Filing Under The Incorrect Bankruptcy Chapter

An experienced lawyer will know whether to file for Chapter 7 or Chapter 13, depending on your financial goals and capabilities. Filing for a Chapter 7 bankruptcy hurts your credit score more than Chapter 13, which allows clients to reorganize their payment schemes with creditors. Those who file under Chapter 13 have a better chance at future financial recovery.

Mistake 3: Hiding Information Regarding Assets

Whether it was intentional or by mistake, hiding or forgetting to disclose information about current assets can lead to fraud charges. A lawyer will ensure that all assets are documented and accounted for to avoid any legal repercussions that may follow for withholding important information.

Mistake 4: Transferring Major Assets Right Before Filing for Bankruptcy

While it might seem like a smart idea to transfer assets to a family member or a friend before filing for bankruptcy so that they cannot be used to pay creditors, this qualifies as a fraud. Never attempt to hide the facts or move valuable assets, a lawyer will advise against this to ensure you are not breaking any laws or committing fraud.

Mistake 5: Prioritizing Payments

Preferred payments such as paying off personal debts to friends and family members is a major mistake. There is a good chance that the court will take away this money to redistribute it to all creditors, which can cause more problems with those closest to you.

Attorneys will make sure that no payments are prioritized unless it is approved by the court.

Mistake 6: Going On Spending-Sprees Before Filing

People who plan to file for bankruptcy might think that it is their last shot of going on a shopping spree, after all, they will no longer be held liable for any debts once the paperwork is filed. This is wrong.

The moment creditors notice the sudden charges, especially if they are significant, they can still demand payment and hold you responsible. Lawyers will ensure that all their clients refrain from making large and expensive purchases before filing for bankruptcy to avoid any payment or nonpayment issues in the future.

If you are looking for respected and highly trusted bankruptcy lawyers, contact our team today at Bolger Law Firm. We can help you with bankruptcy, personal injury, and real estate legal issues.

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