No individual or businessman would dream of filing for bankruptcy. Since the media conveys being bankrupt as a bad and unfortunate event, we can’t help doing whatever it takes just to avoid the need to declare bankruptcy. Declaring bankruptcy is not only time-consuming but costly as well. But what many fail to realize is that it also has its advantages.
Filing for bankruptcy can help reduce your debts, give you peace of mind, and help you get up after failing financially. It can help you stop a lawsuit, car repossession, and foreclosure from happening. This means that even with multiple debts, you can consider filing for bankruptcy so that you can start anew.
When it comes to declaring bankruptcy, there are things you need to avoid doing so that you can dodge penalties and other costly consequences. Once you finally decide that bankruptcy is the perfect option for you, remember not to make the following mistakes:
Waiting too long to file for bankruptcy
Many people wait until they are desperate enough before filing for bankruptcy. But this is a big no-no, especially if you don’t want to be sued or your salary to be withheld because of your inability to pay off your debts. Note that once your creditors obtain a court order that shows that you have already defaulted, this can lead to wage garnishment. Consider hiring a wage garnishment attorney in Salt Lake City. They can help you prevent wage garnishment and regain better control of your finances.
Wasting more money and acquiring more debts
You are already under a financial crisis, which means that this is the most crucial time to make the most out of every penny you make. Now is the time not to waste any money or add more debts under your name. As much as possible, avoid using your available credit or opening a new credit account. Save what little amount you can to your savings account so that you will have something to use during and after the bankruptcy.
Cashing in your 401(k)
Raiding your retirement accounts just to pay a creditor or two is never a good idea. The bankruptcy code protects creditors by not allowing the debtor to pay a creditor in favor of the others. Your credit report may also end up with derogatory marks if you use your retirement funds to pay off some of your debts and still file for bankruptcy. You may be able to lower your debt amounts but will have a hard time catching up and enjoy a good retirement in the future.
Transferring assets to someone else
Do you plan on selling or transferring your assets to another person’s name? Then it is best to scrap the idea off your mind. The court can go after the said asset and use this to pay off your creditors, especially if these are marked as fraudulent transactions. Save yourself the heartache by skipping the transfer. You might even score a good deal and exempt your asset in the bankruptcy.
Sometimes, declaring bankruptcy can be the best financial decision you can make. But this gives you the responsibility to be as transparent as possible to avoid complications. Don’t think that you can benefit from delaying your filing or deceiving the court with your tricks. By knowing what mistakes to avoid, you can avoid jeopardizing your own bankruptcy case.