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Common Bankruptcy Case Mistakes

Posted on in Bankruptcy Attorney
Common Bankruptcy Case Mistakes

Bankruptcy can be complicated. If you are facing a level of debt that has you considering filing for bankruptcy, do it the right way by contacting an experienced bankruptcy lawyer to go over all the pitfalls of the process and determine the right strategy for your case. Your lawyer can ensure that you file your petition correctly and help you avoid certain mistakes that can potentially invalidate your bankruptcy case and keep you in debt.

Failing to List All Your Creditors

When you file for bankruptcy, you need to list all of your creditors in the filing. Failing to list a creditor in your filing can keep that debt from being discharged through your bankruptcy. In a Chapter 13 case, this can mean having to repay it in full after your case is closed. In a Chapter 7 case, the creditor can take action to recover your nonexempt assets or seek repossession or foreclosure of your property.

Spending Money Nonchalantly Before Filing for Bankruptcy

You need to spend money to live. You need to buy food, put gasoline in your car, and pay your utility bills and your rent or mortgage payments. None of these are nonchalant purchases. Debt from new clothes, entertainment, and vacations purchased shortly before filing for bankruptcy are not always dischargeable because the court can assume that you accrued this debt with no intention of repaying it.

Attempting to Repay Certain Loans Before Filing for Bankruptcy

You might think that it is a good idea to pay down some of your debt before filing for bankruptcy, but be careful with this. When you file for bankruptcy, certain debts have a higher priority than others. If the court finds that you repaid a lower priority debt, like a loan to a relative, it could deem that payment to be “preferential” and require the recipient to return the money so it can be applied to your higher priority debts.

Trying to Avoid Bankruptcy with a Payday Loan or Another Short-Term Fix

Bankruptcy is difficult, but it can be necessary. Be wary of “opportunities” to repair your credit or repay your debt quickly, like payday loans or credit counseling services from unaccredited providers. Any credit repair company that wants you to pay upfront for its services is out to profit from you, not to help you. Similarly, taking out a payday loan can put you at risk of going into more debt with its high interest rate and could subject you to aggressive harassment from its collector.

Work with an Experienced Libertyville Bankruptcy Lawyer

You can avoid making mistakes with your bankruptcy case by working with an experienced bankruptcy lawyer. To learn more about the bankruptcy process and specific issues that could occur with your case, contact our team of experienced bankruptcy lawyers at Newland & Newland, LLP today to set up your initial consultation in our office. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.

(image courtesy of Bethany Legg)

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