Making the decision to file for bankruptcy is always a difficult one. Once you have determined that it is your best option, it is critical to avoid some common mistakes both before you file, and throughout the process.
Aside from the enormous amount of paperwork involved, filing for bankruptcy requires a great deal of preparation. The actions you take–or fail to take–before filing can have a tremendous impact on your bankruptcy case.
What Not to Do Prior to Filing Bankruptcy
Some of the most common mistakes people make when they file for bankruptcy include:
- Keeping your banking accounts at the same institution you have a personal loan: In Florida, banks have the right of setoff, which means they can take money from the banking accounts you have opened with them to pay off any loan they hold when you get behind on payments. Even if you are not filing for bankruptcy, it is a good idea to move your savings and checking account to another banking institution.
- Keeping your banking accounts with the wrong financial institution: Even if you do not have a loan with the same bank you use for your savings and checking account, you should still research the actions your bank will take if you file bankruptcy. For example, Wells Fargo is well known for freezing the accounts of clients who file for bankruptcy, and this could hurt you during the process.
- Not timing the filing correctly: When you file for bankruptcy, you must detail all of your bank accounts and the amounts in them. If you file at a time when your account is quite high, you will have to report that amount as an asset, even if you know there are many automatic deductions and withdrawals in the near future. Wait until your bills are paid, and then file bankruptcy.
- Forgetting about your tax refund: The bankruptcy courts want to know all of the assets you have and, if you do not list them all, including a tax refund, it could hurt your case. Even if you have not received the refund yet, still disclose the amount and use any exemptions applicable to keep it from being seized as part of the bankruptcy process.
- Getting rid of assets just before filing: You should hold off on giving, selling, or transferring title of any assets at least six months before filing, and ideally for a full year before. The court may suspect that you are trying to retain those assets while filing for bankruptcy, and you may even end up facing charges of bankruptcy fraud.
- Paying off personal loans before filing: Many people do not only have loans with financial institutions, but they also borrow money from friends and family members. To avoid the embarrassment of admitting they are having financial institutions, people often pay off these personal loans before filing. However, all creditors are treated equally in bankruptcy court, even those you have a personal relationship with. Do not pay off any debts, and do make sure you include all debts in your bankruptcy forms, even loans held by friends and family members.
- Applying for a home equity loan to avoid bankruptcy: You may think it is a good idea to borrow against your home so you can pay off your debts and avoid bankruptcy. This is usually a mistake. If you cannot repay the loan, you may end up losing your home. If you file bankruptcy, on the other hand, you may be able to use exemptions to protect your home, or you can file for Chapter 13 bankruptcy, which may allow you to keep your home.
While these are the most common mistakes people make before they file bankruptcy, there are also some you want to avoid once the process has already started.
What Not to Do After Filing Bankruptcy
A Florida bankruptcy lawyer will help ensure you do not make mistakes during the bankruptcy process.
The most common of these mistakes are as follows:
- Including inaccurate, dishonest, or incomplete information: Florida law requires you to disclose all information related to your income, assets, financial history, debts, and expenses. If you are careless when filling out this information and miss a pertinent fact to your case, your debt may not be discharged and you may not be able to correct it later. Worse yet, if it is found that you knowingly withheld information, you could face criminal charges for perjury.
- Accruing more debt before filing: It is natural to think that because your debt is going to be discharged, you should apply for another credit card or loan and rack up another few hundred dollars. The bankruptcy court will not look kindly on this and, seeing that you accrued more debt just prior to filing, may not discharge that debt.
- Selling your home before the process is complete: Selling your home may be an issue in certain bankruptcy cases, such as if you are filing Chapter 13. This type of case will extend over three to five years, and selling your home for a major profit may hurt it. If you are filing Chapter 7, selling your home may not hurt your case to the same extent, but it is important to speak to a lawyer to ensure you are not making a mistake.
- Not showing up for your hearing: If you fail to attend your bankruptcy hearing, there is a good chance that the judge will dismiss your case. Your debts will not be discharged, and you may have to start the entire process over again. Always attend the hearing and bring photo identification and proof of your Social Security number.
Our Florida Bankruptcy Lawyers Will Ensure You Do Not Make Mistakes
The best way to avoid making some of the most common mistakes before and during the bankruptcy process is to speak to a Fort Lauderdale bankruptcy lawyer. At Loan Lawyers, we have experience helping thousands of Floridians throughout the bankruptcy process, and we want to put that experience to work for you. Call us today at (954) 807-1361 or contact us online to schedule a free consultation with one of our knowledgeable attorneys.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.