Common Bankruptcy Mistakes

Financial stress is a very difficult problem to live with, one that can take a toll on your personal life, career, credit score, and even your health. When coping with such a far-reaching problem, many people have a hard time coming up with a dependable strategy – and, sadly, many end up making mistakes that only increase their problems in the long run.

Whether you are only considering a reorganization or liquidation, or have started the initial steps, you will need to tread carefully until your difficulties have been resolved. Below is a list of a few of the more common mistakes people in your situation have made before. Try to sidestep them, and you can avoid any number of legal and financial complications.

What Not to Do

Some ideas that may seem good now, but are not likely to work put in the long run, include:

Doing everything yourself. It is virtually impossible to remain objective about a matter that affects you so closely, which can impair your decision-making skills. In addition, there is a vast array of complex laws and even unwritten rules that you may not be aware of. Hiring a professional to assist you may seem expensive now, but it may actually save you a good deal of money – and heartache – in the long run.

Getting reckless with credit cards. Some people make the decision to file, or simply reach a point where their finances can’t seem to get any worse, and literally decide to “go for broke.” After all, you may as well have some fun before the proceedings start, right? Actually, no. A surge in spending in the weeks or months before filing may be interpreted as fraud, which in turn can create a lot of problems for you.

Ignoring your problems. Letters from creditors, ongoing lawsuits, IRS audits – none of these things are easy to face head-on. During such a difficult period, many people cave in to the temptation to simply go back to bed and pretend none of this is happening. Unfortunately, your problems will get worse until you decide to make them better. You need to be proactive.

Trying to hide your assets. It’s an understandable impulse. You are afraid of losing valuable property, so before filing you “give them away” to friends and family, sell them so you can at least have some cash, or simply fail to tell your trustee about them. All of these options can be considered fraud, however. They are simply not worth the risk.

Filing for bankruptcy will never be an easy process, but avoiding major errors can at least keep it from becoming too difficult.

By: Joseph Devine

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For more information about protecting your assets and future during this process, contact the Arizona bankruptcy attorneys of the Harmon Law Office, LLC.