Filing for bankruptcy can be a daunting process, but it can also provide a much-needed financial reset for individuals overwhelmed by debt. However, navigating bankruptcy proceedings requires careful attention to detail and adherence to legal procedures. Many people make avoidable mistakes during bankruptcy that can jeopardize their financial fresh start or prolong the process.
If you're considering bankruptcy in Chattanooga, it’s important to avoid these five common mistakes during bankruptcy proceedings:
1. Hiding Assets
One of the biggest mistakes people make during bankruptcy is attempting to hide assets. Whether it's a second car, property, or even savings accounts, some individuals believe they can protect their belongings by not disclosing them. This is a serious misstep. Bankruptcy courts require full transparency, and failing to disclose assets can result in penalties, including the dismissal of your case or even criminal charges for bankruptcy fraud.
To avoid this mistake, always provide a complete and accurate list of all your assets and financial information. Your bankruptcy attorney can guide you through which assets are exempt and protected under Tennessee’s bankruptcy laws.
2. Running Up Debt Before Filing
It may seem tempting to max out credit cards or take out additional loans right before filing for bankruptcy, but this is a critical error. Courts may view this behavior as fraudulent, especially if the debt is incurred within 90 days of filing for bankruptcy. This could result in certain debts being ruled non-dischargeable, meaning you will still be responsible for repaying them after bankruptcy.
To prevent complications, avoid making large purchases or incurring additional debt once you’ve decided to file for bankruptcy. It’s best to focus on stabilizing your financial situation instead.
3. Not Completing Mandatory Credit Counseling
Before you can file for bankruptcy, federal law requires that you complete credit counseling through an approved agency. This step is mandatory, and failure to complete it can result in your bankruptcy petition being denied or delayed. Credit counseling helps individuals assess their financial situation and explore alternatives to bankruptcy.
To avoid delays, ensure that you attend credit counseling well in advance of filing and obtain the certificate of completion required by the bankruptcy court.
4. Failing to Keep Up with Post-Filing Obligations
Bankruptcy doesn’t end when you submit your petition. There are several post-filing obligations that must be met, particularly in Chapter 13 bankruptcy cases where a repayment plan is involved. Missing court deadlines, skipping payments, or failing to attend creditor meetings can negatively impact your case. In some cases, failing to meet these obligations could result in your case being dismissed.
It's essential to stay on top of all court requirements and ensure you are meeting deadlines. Your bankruptcy attorney can help you keep track of important dates and payments to avoid jeopardizing your case.
5. Choosing the Wrong Type of Bankruptcy
There are different types of bankruptcy, and each is designed for different financial circumstances. One common mistake people make is choosing the wrong type of bankruptcy. Chapter 7 bankruptcy is designed for individuals who have little to no income and want to eliminate most unsecured debts. Chapter 13 bankruptcy, on the other hand, is for individuals with a steady income who want to reorganize their debt into a manageable repayment plan.
Filing for the wrong type of bankruptcy can result in wasted time and effort, as well as delays in achieving financial relief. A bankruptcy lawyer can help you evaluate your financial situation and determine which type of bankruptcy is right for you.
Filing for bankruptcy can be a complex process, and mistakes made along the way can have serious consequences. By avoiding these common pitfalls, you can increase your chances of a successful outcome and get back on the path to financial recovery. It’s crucial to work with an experienced Chattanooga bankruptcy attorney who can help guide you through the process and ensure you avoid these mistakes.
Contact Tom Bible Law Today!
If you’re considering bankruptcy, don’t go through the process alone. Contact our experienced Chattanooga bankruptcy attorneys today for a free consultation. We’ll help you avoid common mistakes and guide you toward a fresh financial start.