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Filing for bankruptcy can give you a second chance at financial freedom. But to reap all the benefits bankruptcy provides, it is essential to follow the stated rules and procedures; one misstep could delay or derail the entire process. To help you avoid this possibility, below are three of the more common mistakes people make when filing bankruptcy.

3 Common Errors People Make During Bankruptcy

1. Filing Under the Wrong Chapter

Most consumers choose either Chapter 7 or Chapter 13 bankruptcy. While both achieve the ultimate goal of getting out of debt, they reach that goal through very different paths. Take the time to educate yourself about both kinds of bankruptcy, and consult with your attorney to find the one appropriate for your situation. 

2. Accruing Substantial Debt Right Before Filingbankruptcy

It's not unheard of for those planning to file bankruptcy to wrack up credit card debt in the weeks and months before filing with the intention of having that debt eliminated through Chapter 7. But the bankruptcy courts will carefully review all debts made in the 90 days prior to filing, and they could refuse to dismiss these balances as part of your bankruptcy. 

3. Lying About or Concealing Assets

There's no way around it—a bankruptcy filer must reveal all of their assets to the courts. Minimizing assets or temporarily transferring assets to someone else with the plan to take them back after the bankruptcy has been finalized are both illegal. Though it may be tempting to try to conceal an asset in order to save it from liquidation, resist the urge; you are jeopardizing your entire bankruptcy, and the whole case could be thrown out.

 

By avoiding the above mistakes, you will be making solid, ethical decisions for your bankruptcy, finances, and future. Attorney Allyson Pearce of Pearce Law Firm has been helping Baldwin County, Alabama clients find debt relief for more than 15 years. Start exploring the possibility of bankruptcy, and schedule a consultation by calling (251) 301-8250 or visiting her firm's website.

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