What to avoid before bankruptcy should be considered before making any quick decisions.
If you are struggling under the stress and burden of unpaid debt, it can be tempting to make rash decisions to get relief.
But bankruptcy, while an effective financial solution for some, is a serious legal matter that should be carefully thought out.
Unfortunately, many people rush into bankruptcy because of mounting financial pressures without considering whether they are in the best position to file.
Here are a few things you should avoid before filing bankruptcy, so that you can better decide if your situation is conducive for moving forward with a bankruptcy case.
With bankruptcy, timing can be everything.
If you rush and file for bankruptcy too quickly, you could make your financial situation worse.
Because you can only receive a chapter 7 discharge once every seven years and a chapter 13 discharge every six years, you want to be sure you are in the best position to file.
For example, if an individual is sick and facing mounting medical bills, it may be best for them to wait until the illness stabilizes before filing bankruptcy.
It can also be detrimental to wait too long to file bankruptcy.
Before filing bankruptcy, for example, consider if you have wage garnishment in place.
Filing quickly in this instance would help you to stop the garnishment and have more income for paying your bills.
Many people make the financial mistake of draining their retirement account to pay bills before filing bankruptcy.
Retirement funds are protected in bankruptcy. You may needlessly drain your nest egg to pay debt that would be wiped away with a bankruptcy discharge.
Honesty is key to bankruptcy.
Failure to tell the truth on all paperwork and in all responses is the easiest way to jeopardize your case.
Not only that, but bankruptcy fraud is a serious crime, punishable by up to $250,000 in fines or even jail time.
If you are anticipating a large asset, such as a settlement, inheritance, tax refund, or repayment of a loan that you made to someone else, it’s best not to file bankruptcy right away.
These funds could be in jeopardy of being lost in a bankruptcy ruling.
Before you file for bankruptcy, it’s a good idea to determine if the large asset would be enough for you to get out of debt on your own without the need to file at all.
The decision to file for bankruptcy is a difficult and lengthy one that should not be done without the legal guidance of a bankruptcy attorney that you trust.
At Parker & DuFresne, we provide relief, restoration, and renewal through a compassionate approach.
Our goal is to get clients across Northeast Florida back on the road to financial stability.
We specialize in bankruptcy law. Through a thorough consultation, our attorneys will help you determine if bankruptcy is the right solution for you. Contact us today to learn more!
Parker and DuFresne