Worst Bankruptcy Mistakes and How to Avoid Them

October 22, 2011 by  Filed under: Bankruptcy 

When it comes to the worst bankruptcy mistakes, you might think that they run the gamut from incorrectly filing your paperwork to concealing some of your assets. While the former can be redressed and the latter can bring about criminal charges, there are still some pretty heinous bankruptcy mistakes that could tear apart your finances – and your life – if you end up making them.

Just what are these worst bankruptcy mistakes, and how can you avoid making them? Whether you’re filing for Chapter 7 or Chapter 13 bankruptcy, here’s what you need to know about the biggest missteps you can take when declaring bankruptcy:

Mistake #1: Knowing You Won’t Be Granted The Bankruptcy

Think it’s unlikely that some people file for bankruptcy knowing full well that they won’t qualify? Think again: debtors are dismissed constantly simply because their income to debt ratio is too high to allow the bankruptcy courts to approve their cases. This can happen for several reasons; however, one of the most popular is that debtors file so they can seek temporary relief from creditors. While this might work in the short-term (as soon as you file for bankruptcy, you’re granted an automatic stay), this also means that you’ll eventually have to face your creditors again. And if you do need to file for bankruptcy again within the year, you won’t be granted an automatic stay – meaning you’ll have to deal with the legal intricacies of a bankruptcy case AND harassing creditors.

Mistake #2: Impulsively Submitting A Payment Plan

So you filed for a Chapter 13 bankruptcy, which means you’re required to repay your creditors based on a payment plan that you’ve come up with. You’re sick of dealing with the legalities and headache of your Chapter 13 bankruptcy case, so you just decide to whip up a repayment plan and submit it. Or perhaps you waited a bit too long to come up with a repayment plan, and now you’re scrambling to meet the deadline. Either way, you just made a huge bankruptcy mistake.

If you want to successfully discharge your bankruptcy and start rebuilding your finances, you need to devise a repayment plan you can actually stick to – not one that was built in the wee hours of the morning before that deadline. Take the repayment plan seriously, and you won’t be struggling to pay your debts during the course of your bankruptcy.

Mistake #3: Going It Alone

In an effort to save money, many people tend to forgo bankruptcy attorneys – and end up falling for the biggest bankruptcy mistake of all. Let’s face it: bankruptcy cases are complex, time-consuming and confusing. If you have a high income, a complex array of assets and debts or just want to ensure that your bankruptcy case is successfully discharged, then you’ll want to work with a highly qualified and experience bankruptcy attorney.

Reed Allmand, sponsoring attorney for Bankruptcy.net, is constantly looking for ways to provide the best financial information for his clients. Whether you are considering filing for bankruptcy, or are currently going through a Chapter 7 or Chapter 13, visit http://www.bankruptcy.net for up to date news and information you need to know.

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