Seven Mistakes to Avoid When Filing for Bankruptcy

Seven Mistakes to Avoid When Filing for Bankruptcy

July 13, 2020

Filing for bankruptcy in The Woodlands, TX can be downright distressing—you’re faced with the possibility of losing your assets and disrupting your normal way of life in order to pay off your debts. Many people are tempted to give away their assets or otherwise try to soften the blow, but that can come with serious consequences.

When you file for bankruptcy, it’s crucial to be as honest with your attorney and the bankruptcy court as humanly possible. Mistakes can cost you the fresh start that bankruptcy offers, so make sure to follow these tips to avoid these common bankruptcy mistakes in The Woodlands, TX:

  • Hiding your assets: Of course you want to keep your home, your car and other assets that you’d rather hang on to than sell to repay debts—but if you sign them over to a relative or “forget” to mention a bank account in your name, you’re actually breaking the law. Don’t jeopardize your case to hang onto an asset.
  • Spending money carelessly before filing: Hey, you’re going to file for bankruptcy anyway, so why not go all out on a spending spree, right? That would be a huge mistake—that debt may not be dischargeable, and your bankruptcy trustee is not going to look kindly upon these purchases. The idea of bankruptcy is to repay your creditors as much as possible, so extra expenses are not a good idea.
  • Repaying your family before filing: You might want to make sure Grandma gets that $1,000 she loaned you before you file, but the court will look at this as “preferential” treatment of creditors—and Grandma might have to give that money right back to the bankruptcy trustee.
  • Forgetting or not listing all of your creditors: Just like you can’t “forget” assets, you should also make sure not to “forget” your creditors and debts, either. You want the debt to be discharged, so make sure to list them all.
  • Taking on new debt: This is not the time to invest in a new car or put a down payment on a new condo. Spend your money wisely, on the necessities only.
  • Using your retirement accounts: Retirement accounts are exempt from bankruptcy proceedings, so don’t raid them for extra cash or to pay off certain creditors. Preferential repayment isn’t allowed, and once you take the money out of your account, it may be up for grabs. It’s much smarter to simply leave it in the accounts and let it build for your actual retirement.
  • Not hiring an attorney: Finally, hiring an attorney is key to a successful bankruptcy case. You can file the case yourself, but a skilled attorney will be able to help you strategize and negotiate your repayment options so you can keep as many of your assets as possible.

If you’re interested in getting more bankruptcy tips in The Woodlands, TX, it can help to speak with an experienced bankruptcy attorney. Reach out to James R. Jones, Attorney at Law today to arrange a consultation.

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