Filing for bankruptcy can be a difficult process, especially for those who haven't prepared ahead of time.
In fact, preparation is a key part in determining the success or failure of a bankruptcy case.
While you may assume that the process doesn't take much on your part, you may be surprised to learn that there are a few ways to improve the outcome of your case.
Maximizing the success of your case is as easy as avoiding these common mistakes and traps.
No Representation While some people have successfully navigated the bankruptcy process alone, hiring a bankruptcy attorney can significantly improve your case.
Besides being well versed in the laws of bankruptcy, an attorney can review your unique case prior to filing to better determine your eligibility and ways to boost your success.
Even if you don't want to utilize the services of an attorney throughout the entire process, it is a good idea to at least consult with one before you file to ensure you are pursuing the right debt relief option for you in the best way possible.
More Debt One thing most people do either purposely or unknowingly is accumulate more debt before they file for bankruptcy.
There are strict rules about debt acquisition prior to bankruptcy and violating these rules can drastically impact the success of a case.
For example, debts exceeding $550 on a credit card or cash advances of $825, that are acquired within 90 days of filing, will not be eligible for discharge.
Whether these debts were accidental or intentional, you may find yourself ineligible for bankruptcy or being forced to leave such debts out of the filing.
Moving Assets One of the biggest fears people have about bankruptcy is the risk of losing assets.
While asset liquidation is rare in occurrence, many people go to drastic lengths to prevent the loss of an asset.
It isn't uncommon for people to sell or transfer assets prior to filing for bankruptcy in efforts to hide them from the court.
This is a bad idea and could even be viewed as fraudulent by the court, which could lead to your case being dismissed.
Bankruptcy laws strictly prohibit the concealment or transfer of assets in a bankruptcy filings.
However, the laws do allow for a debtor to sell an asset prior to filing if the debtor (1) obtains fair market value for the asset and (2) reports the sale of the asset to the court in the filing.
Changing Finances When getting ready to file for bankruptcy you might think that eliminating some debts could improve your chances at qualifying.
In fact, this action has the opposite effect.
The same is true for securing more income or a second job.
If the bankruptcy court determines that your income is sufficient to repay your debts outside of bankruptcy, or your debts are too low, they will disqualify you from the case.