As stressful as filing for bankruptcy can be, it’s important to follow the law. Whether you are filing for Chapter 7 or Chapter 13, mistakes can hinder the process, lengthening it,  making it more costly, and leading to creditor objections. Below, review some of the most common errors people make when filing.

A Guide to Common Bankruptcy Filing Mistakes 

1. Using or Loading up on Credit Cards

Before and during the bankruptcy process, do not use credit cards. As tempting as it can be to use plastic to pay for items when you’re in major debt, it will only make the situation worse, and may lead to objections by creditors. Large purchases made within 90 days prior to filing may have to be paid back. 

2. Lying About Finances

Never omit information or mislead the bankruptcy court regarding your finances. Lying or omitting assets, such as failing to mention a vacation home in the mountains or a boat you own, can result in denial of your Discharge and criminal prosecution for Bankruptcy Fraud. 

3. Liquidating Retirement Accounts

Do not liquidate 401(K), IRA, Roth IRA, or another retirement funds to pay off creditors or get more cash before filing. These funds are exempt from the claims of creditors and protected in Bankruptcy. Also, any monies paid to family and friends for money owed can be collected directly from them and used to pay creditors.

4. Transferring Assets out of Their Names

Keep all assets in your name. Do not transfer them to third parties. Transferring to third parties within one year prior to filing is not permitted under the Bankruptcy Code. Finally, if you’re filing for Chapter 13 bankruptcy, you’ll get to keep items of monetary value in exchange for your payments under your plan.

Avoid these and other bankruptcy mistakes by working with Thomas A. Corletta, Attorney & Counselor at Law. Offering nearly 40 years of experience in consumer bankruptcy, Attorney Corletta provides residents throughout Rochester and Monroe County, NY, with personalized services, and he never farms out his cases. Call (585) 546-5072 today to schedule a free consultation, or visit this attorney online for service details. Get additional updates and tips on Facebook.