Bankruptcy is a huge financial decision. Handled right, it can provide the debt relief you badly need to get back on your feet. Handled incorrectly, however, bankruptcy can worsen your situation.
There are mistakes around declaring bankruptcy that most people find sensible to make. However, if you decide to file for bankruptcy, it is in your best interest that you steer clear of these three mistakes.
Filing bankruptcy at the wrong time
The decision to file for bankruptcy is one that you should not make in a rush. If you owe money, and you are struggling to pay, it is important that you explore your options. These can include renegotiating a payment plan or a debt cancelation deal. However, if these options are off the table, then you need to start your bankruptcy declaration process ASAP. Do not wait too long if bankruptcy is it is inevitable. Doing so will only drain your finances.
Trying to hide assets
Honesty is an important rule of thumb when declaring bankruptcy. Failing to disclose your assets while filing for bankruptcy will only hurt you if you are found out. In fact, this amounts to bankruptcy fraud and can greatly hurt your chances of discharging your debts. Furthermore, you could face criminal charges for this. Be as honest as possible when declaring your assets.
Declaring the wrong bankruptcy
Most people do not understand the difference between Chapter 7 and Chapter 13 bankruptcies. Chapter 7, also known as liquidation bankruptcy is designed for discharging non-secured debts like credit card debts, medical bills and personal loans. Chapter 13 bankruptcy, on the other hand, is designed for discharging secured debts. Filing the wrong bankruptcy can lead to your claim’s denial.
Bankruptcy can be an important financial tool when you are overwhelmed with debt. Find out how you can protect your rights and interests when declaring bankruptcy.