Facing the reality that you're going to need to file for bankruptcy can be harsh, but if bankruptcy is truly the right choice for you, it will be worth it in the long run. Both chapter 7 and chapter 13 bankruptcy can help you enjoy a "clean slate" of sorts when it comes to your finances. Still, there are some common mistakes you'll want to avoid as you prepare to file for bankruptcy that could land you in even more financial trouble.
While it might seem like a logical decision to transfer high-interest debt to a lower-interest credit card or account, you should actually avoid transferring any debt before you file for bankruptcy. This type of financial transaction will be viewed in the same way as a cash advance or credit card purchase, which can be detrimental to your bankruptcy application.
Withdrawing From Retirement
If you're short on funds, it might also seem reasonable to withdraw some funds out your retirement fund early. Unfortunately, once you withdraw money from that account, it is no longer protected from creditor claims. As a result, you could end up having to pay that money back to a creditor. If it's left in your retirement account, however, it will remain safe and you won't have to worry about losing it.
Assuming You Need to Sell Your Home
While it may make financial sense to sell your home in some cases, it is vital that you speak with a bankruptcy attorney and a financial advisor before you decide to put your home on the market. In most cases, there are ways to negotiate and work with your creditors in a bankruptcy so that you can keep your home and some other assets, depending on the type of bankruptcy you're filing.
Failing to Disclose Information
Finally, when it comes to preparing your bankruptcy documents and working with your lawyer, remember that it is always in your best interest to disclose all information and to be honest with your lawyer. The last thing you want is for something to be uncovered at the last minute that would prevent you from being able to have your bankruptcy declaration approved. This means answering all your lawyer's questions honestly and providing all financial and legal documents requested.
By avoiding these all-too-common mistakes as you prepare to file for bankruptcy, you can make sure the process goes as smoothly for you as possible. For more information, contact local professionals like Adrian Lynn & Associates.