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Avoid these 5 common mistakes when declaring bankruptcy

On Behalf of | Sep 24, 2018 | Chapter 7 And Chapter 13 Bankruptcy |

Filing for bankruptcy is not something you do every day. Obviously, you have made a big decision in choosing to file, and you want the process to go well.

To that end, here are five mistakes that you should avoid when preparing to file bankruptcy:

1. Putting it off

Now that you have made the decision to seek bankruptcy protection, do not put it off. Waiting to act will only cause your debts to snowball, and you might be looking at consequences such as creditor harassment and wage garnishment.

2. Hiding certain assets

Do not fail to mention another bank account that you may have, and do not transfer money to relatives or friends for safekeeping prior to filing for bankruptcy. By attempting to hide assets, you open yourself to the possibility of fines, or even prison time.

3. Omitting creditors

Be sure to list all your creditors when filing for bankruptcy. If you omit a creditor, that particular debt will likely not be discharged.

4. Running up credit cards

Some people believe that there is nothing wrong with going on a big spending spree right before filing. Do not follow their example. Purchases that appear on your credit card at the eleventh hour may not qualify for discharge. Simply stop using your credit cards altogether.

5. Repaying debts to family

You may not wish to include a financial obligation to a family member in your bankruptcy. However, if you repay such a debt prior to filing, the trustee may consider this a “preferential” payment and disallow it. As a result, your family member would be required to repay that money to the trustee.

Keeping changes to the law in mind

The Bankruptcy Abuse Prevention and Consumer Protection law of 2006 has made filing for bankruptcy a more complicated undertaking in the state of New Jersey. Proper preparation, avoiding mistakes and adhering to legal advice will help you get through the process confidently, so you can enjoy a fresh start to your financial future.

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