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Mistakes to avoid when preparing for bankruptcy

On Behalf of | Oct 2, 2018 | Bankruptcy

Louisiana residents who face increasing debt and financial pressure may turn to bankruptcy for relief. Whether a Chapter 7 or a Chapter 13 filing will suit your situation best, there are some common errors to watch out for as you prepare.

The following mistakes can cause a variety of problems, from prolonging the process to accusations of fraudulent conduct. If you have specific questions or concerns, addressing them with a legal professional can clarify matters for you. Starting the process properly can help you navigate it smoothly and obtain the fresh start you need.

1. Omitting assets or liabilities from your filing

One part of filing for bankruptcy consists of compiling a list of all your assets and all your debts. While some people may omit items from this list because of improper intentions, the majority simply do not realize a particular item may belong on this list.

Common omissions include debts owed to family or friends, as many people do not think of these as essentially the same as owing money to a credit card or a car dealership. You may also have given away or lent in the long term a piece of property, such as a car. While you may no longer think of this asset as yours, it may still be so legally.

2. Paying debts outside the bankruptcy process

By the same token, one common impulse is to repay personal debts you owe to loved ones. It can seem strange to navigate these personal interactions through a formal procedure such as bankruptcy. However, paying off a debt separately close to bankruptcy can be deemed a preferential payment. Bankruptcy trustees may sometimes seek to recover such payments from creditors.

3. Running up debt before filing

Finally, trustees often look closely at a petitioner’s financial activities in the months leading up to the bankruptcy filing. Borrowing large amounts of money or maxing out credit cards at this point often sends up a red flag. One may end up not having these debts discharged in the bankruptcy process.

Disclaimer – Attorney Advertising. Under Federal Law, we have been designated a Debt Relief Agency and we help people file for bankruptcy relief under the Bankruptcy Code. This information is not intended as legal advice and no attorney-client relationship is created. Results may vary. Results not guaranteed. Dramatization – not actual clients in pictures and videos. Thomas C. McBride, attorney in Alexandria, LA.