When faced with a difficult financial situation, many people find bankruptcy the best solution.
According to the American Bankruptcy Institute, 12,461 Texans filed for Chapter 7 bankruptcy in 2021. If you find yourself ready to file, help ensure a smooth process and recovery by avoiding the following three mistakes.
1. Hide assets
When you file, the courts require that you provide full disclosure of all income and assets. If you try to hide a secondary bank account or do not include owned property, you not only risk disqualification from filing but also potential criminal charges and steep fines. The courts take bankruptcy fraud seriously.
2. Transfer assets
Some people feel that if they transfer a car, cash or house to someone else to ensure it will not end up as part of the bankruptcy. In reality, doing so will appear as a way to defraud the courts. While you may feel overwhelmed at losing assets, remember that bankruptcy comes with some asset exemptions.
3. Continue using credit cards
While you may feel the temptation to have one last hurrah, avoid running up credit card bills. In many cases, the use of those cards played a key role in facing bankruptcy. Although you can use them to pay essential living expenses, do not make any large purchases or take advances. That may provide the proof a credit card company needs to challenge the filing as well as file charges against you for fraudulent borrowing.
When done right, bankruptcy offers a fresh start and new beginnings.
