10 Dumb Mistakes You Would Do During Bankruptcy

Bankruptcy is often feared by most consumers because of the anticipated financial burden. This is often the perception since the credit rating will significantly go down to the point at which loans and credit card applications will no longer be accepted. Acquiring services at home will also become difficult when bankruptcy is filed. But this is often the only option for those in a financial downturn. Bankruptcy will help them save their assets such as their property.

If you are thinking of filing bankruptcy, it is important to remember that there are transactions and situations you should avoid before, during and after filing bankruptcy:

1. Ignoring legal liabilities – Do not be afraid of lawsuits from financial institutions after you have filed for bankruptcy. The fact that you are already in this financial position prevents them from pursuing you for immediate payment. Get in touch with your bankruptcy lawyer so that proper documentations will be submitted to stop the lawsuit.

2. Avoiding to list other lenders – The law states that you have to write lenders who may ask for payments in the future. Do not miss out anything (even your friends and relatives) so that you will not be forced to pay them.

3. Too late in filing for bankruptcy – This financial situation is often seen as the final option. But this can cause further financial troubles since lenders can file lawsuits before you file for bankruptcy. If you cannot cope up with the payments in the next few months and your credit score is also going down, it is time to file for bankruptcy.

4. Incomplete documentations – This is always the most difficult part since you have to find or produce the needed documentations to complete the bankruptcy proceedings. Seek assistance from your bankruptcy lawyer so that you can produce the needed documents faster.

5. Filing when expecting huge tax refunds – Your tax refund can be considered as an income as this was originally from your personal income and other transactions. Your tax refund after filing bankruptcy will not go directly to your pocket but will be collected and paid to your lenders.

6. Cashing on 401(k) and other retirement funds first before bankruptcy – You can take out your money from your 401 (k) but this will not be seen as a good sign for those seeking bankruptcy. Allow your 401(k) to grow even more during bankruptcy as this form of fund is protected from lenders.

7. Resorting to equity loan – Just like cashing your 401(k), resorting to equity loan before bankruptcy will only increase your financial liabilities. Credit repair will also last longer because you have just added another loan. Your equity loan might even place your property in danger since you have just taken a huge sum against the value of your property.

8. Not including every asset – Do not think that the government or your lenders will not find out your additional asset. This is against the law and your lenders will do everything they can to run after your assets. Better to include them all for protection rather than using them later for disposition.

9. Filing bankruptcy when expecting a huge payment – Just like a tax refund, it is always best to hold the bankruptcy filing when you are expecting a huge payment. The money you will collect after bankruptcy will be most likely used as payment to your lenders.

10. Not using a lawyer – Anyone can file for bankruptcy but not everyone can file it correctly. Spend extra money on a bankruptcy lawyer so that your assets and some of your finances will be intact while trying to repair your financial problem. As already indicated, your lawyer should also help you in preparing the right documentations during your bankruptcy hearing.