Five Major Mistakes to Avoid When Filing Bankruptcy

Making the decision to file for bankruptcy is scary. For the average person, bankruptcy law in Delray Beach is complicated and confusing. It’s hard to know what to expect on the other end, let alone plan for how you will rebuild your credit and finances in a healthy way. Many people equate bankruptcy filing with losing everything, but that’s rarely the case. In fact, this process is specifically designed to help you salvage what you can while consolidating and eliminating debt.  

If you are in the process of filing bankruptcy, avoid these five detrimental mistakes. 

Lying About or Hiding Assets 

Qualifying for Chapter 7 bankruptcy includes a “means test” which assesses your ability to pay off creditors. During this process, you must disclose all income and assets. Failing to do so could result in your case being dismissed and a legal ban against future attempts to file Chapter 7 bankruptcy. Lying about these factors in your bankruptcy filings doesn’t matter, anyway. Once a trustee accesses your financial information, the likelihood these assets will remain hidden is slim. Likewise, attempting to hide or lie about additional creditors is also moot, as credit companies can gather information about your bankruptcy case. 

Giving Away Assets to Family or Friends 

A common mistake when it comes to bankruptcy law in Delray Beach is the transference of property of assets to a loved one before or during the process in an effort to protect or secure it. Often this is done under the guise of a “gift” or sales transaction with the intent to reverse it afterward. Not only is this illegal, it’s not a recipe for disaster. Regaining ownership after the fact may be messy and cause strained relationships between you and friends and family. You may think you are protecting yourself against repossession, but there’s an easier way with Mufson Law. 

Tapping into Retirement Money 

The money in your 401K or other retirement savings accounts has a designated purpose. Dipping into these funds is not only ill-advised, it’s pointless. These accounts are protected during bankruptcy proceedings, so they won’t be affected unless you choose to withdraw money to pay toward debts. Choosing to do so is not allowed, as it shows favoritism toward certain creditors over others who remain unpaid. Don’t fret, your bankruptcy attorney at Mufson Law can help you determine your best course of action. 

Maxing Out Credit Cards 

Trying to use what credit you have available before filing bankruptcy can complicate your case. If your creditor believes you have done so intentionally, they can challenge the courts’ attempt to eliminate this debt. They may accuse you of fraudulent borrowing, which can affect your financial future. If found guilty, you may be held responsible for paying some or all remaining debts. In general, credit transactions made within 90 days of filing are not considered during the proceedings and will continue to be your responsibility. To be safe, once you file for bankruptcy, do not use your credit cards. 

Not Consulting an Attorney 

Bankruptcy law in Delray Beach is intimidating and difficult to navigate on your own. Failing to consult a lawyer when filing your case can make the process drawn out or lead to rejection. At Mufson Law, we focus on debt solutions, including bankruptcy. Our team of knowledgeable and experienced legal professionals is prepared to help you find the best solution for you, up to and including bankruptcy options. 

If you’re ready for a debt-free future, contact us now.