Bankruptcy offers relief from most or all of your debts and allows you a fresh start in rebuilding your finances and credit rating. However, mistakes made prior to filing for bankruptcy can result in some or all of your debts not being discharged. In some cases, a mistake may even lead to the dismissal of your bankruptcy petition. Being aware the common mistakes petitioners make can help you avoid them and their potentially disastrous outcomes.
Here some examples of pre-filing conduct to steer clear of:
- Repaying debts or transferring assets to a family member just prior to filing — If you do this, the bankruptcy trustee may reverse the transactions on the grounds that such preferential transfers treat other creditors unfairly. A transfer of assets can also be reversed if the trustee believes that it was fraudulent, namely, made to frustrate creditors. Whether the trustee will reverse a transaction depends on the specifics of the situation, but it is best to completely avoid transfers just prior to filing.
- Incurring new debt just prior to filing your petition — This can include purchasing a large number of consumer goods on a credit card and filing bankruptcy immediately thereafter. This could result in the debts not being included in your bankruptcy, meaning that you will still have to pay them even after your discharge has been completed.
- Failing to fully and properly disclose assets — Your Chapter 7 petition might be dismissed if the trustee believes that you are intentionally omitting an asset so that you may pass the bankruptcy means test. A dismissal for fraud would mean that you would be prohibited from filing for bankruptcy on those same debts in the future.
- Waiting too long to file your petition — It is understandable that you may wish to pay your bills rather than discharging them. This can come from a sense of obligation as well as a desire not to harm your credit report. Often, however, people spend large sums of money paying debt only to later realize that there is seemingly no end in sight. By filing for bankruptcy sooner rather than later, you can avoid putting money towards a debt that would be discharged anyway.
- Attempting to handle the bankruptcy yourself — Failing to retain a qualified bankruptcy attorney can result in your Chapter 7 or Chapter 13 petition containing errors or omissions, or in creditors’ objections not being effectively addressed. Some debts might not be discharged or your petition might be dismissed in its entirety.
Jeff Field & Associates provides assistance with Chapter 7 and Chapter 13 bankruptcy cases throughout Georgia. We have locations in Athens, Douglasville, Gainesville, Lawrenceville, Marietta and Scottdale. Reach out to us by calling 404-381-1278 or contact us online to schedule your free initial consultation.