The 7 Most Common Bankruptcy Mistakes
Hi there!
Thanks for inquiring. You're wise to invest time educating yourself about Bankruptcy because it's a very difficult and rule-driven process, so it's very easy to create a disaster if you don't know the rules!!
It's impossible to teach you the thousands of things you need to know, of course, but I can at least give you a few crucial tips. So, I've developed the list below of the 7 most common bankruptcy mistakes I've seen in my years of practice.
If you'd like more information beyond this, I'd be happy to help, so please click the link below to request a free 3-Step case evaluation!!
Have a great day!
- Jacque
1
Assuming that bankruptcy will eliminate judgment liens
Bankruptcy will eliminate your personal liability for the debt, but it will not automatically eliminate any judgment liens that have been recorded with the county recorder's office. Some (but not all) judgment liens can be vacated if the court orders it, but a motion would have to be filed to request that. People who file bankruptcy without the assistance of a good attorney often wind up shocked somewhere down the road when they discover that the lien still exists.
2
Failing to disclose
Disclosure, disclosure, disclosure!! That's the name of the game in bankruptcy!! It's all about disclosure. Many people without an attorney make the mistake of submitting only partial information, or omitting information because it "seems" irrelevant. But there is NO personal discretion in bankruptcy. You can't pick and choose what information you're going to provide. You have to disclose EVERYTHING, even if it doesn't seem relevant. It's the court's job to decide if it's relevant or not. Failing to disclose can be considered bankruptcy fraud, which is a federal criminal offense, and the court takes it very seriously.
3
Being disorganized
Being organized is crucial! It's not a criminal offense to be disorganized, of course. But it doesn't bode well for you if the court has to struggle with interpreting your documents, records, and data. The court has thousands of cases so it doesn't have time to mess around with messy cases. If you make it hard on them, they will make it hard on you, and your case won't go through until you clean it up. It's much more effective to submit a clean and organized case to begin with. The key to a smooth and easy case is to make it easy for the court to process your case.
4
Losing assets
Some of your assets are exempt (protected from creditors) and some are non-exempt (not protected from creditors). Many people assume they don't have any assets so they pull the trigger on a bankruptcy without getting any advice. Unfortunately, many of those people get blind-sided along the way when the court orders them to turnover $5,000 (or whatever the amount). Say what????
This frequently happens to unsuspecting bankruptcy filers. This is because people have more assets than they realize, which causes them to unknowingly step on what I call a Bankruptcy Landmine, and it's a pretty big shocker! If the money isn't turned over, the court will deny the bankruptcy.
The sad part is that this can often be prevented with proper bankruptcy planning. So the moral of the story for you is, make sure you do proper bankruptcy planning!
5
Failing to get Confirmation
In a Chapter 13 bankruptcy, the proposed bankruptcy Plan must be approved by the court, which is a process known as "Confirmation." It's a challenging and tedious process, so many cases don't ever get Confirmed. And without Confirmation, the case will eventually be dismissed.
6
Paying too much money
Chapter 13 bankruptcy reorganizes your debts and allows you to pay back only a portion of the debt based on what you can afford to pay. The mistake people frequently make is paying more than they had to pay. This is because they simply don't know what they have to pay because there is no guidebook.
7
Not having legal assistance
I've been doing this for 13 years, and I've had many hardships myself (see my Surviving the Storm page), so trust me, I completely understand not being able to afford an attorney.
But I have to tell you, most of you can't afford to NOT have an attorney.
For one thing, the bankruptcy landmines I mentioned above occur frequently, and it usually costs more than what it would have cost to have an attorney help you avoid the landmines to begin with. And, an attorney will ensure that your Plan gets confirmed and that you don't pay too much into it.
That being said, you don't even necessarily need to hire an attorney to represent you in the case. You just need to at least get some coaching on it. Having a one-hour consultation or coaching session is at least better than nothing.
Incidentally, you'd be surprised at the options that exist to help you create the money to pay attorney fees. My office actually offers several Creative Options for you, so you might want to check that out. Plus, I can give you more ideas once I know your situation.
I hope that was helpful!!
If you'd like more information beyond this, I'd be happy to help, so please click the link below to request a free 3-Step case evaluation!!
And, I'd greatly appreciate it if you'd click below and LIKE me on Facebook. I offer many other Services in addition to bankruptcy, so please don't keep me a secret from your friends!!
Hope you have a great day!
- Jacque
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