Despite its widespread recognition, bankruptcy is also misunderstood. There are many misconceptions and myths about bankruptcy that can lead to costly mistakes when you decide to file. Learning the facts about the most common bankruptcy mistakes can help you protect your case and improve your chances of success.
Here are a few things to consider when you file for bankruptcy.
Delays can increase your debts
If you feel bankruptcy is the right choice, it is better to file as soon as possible. The longer you wait to file, the more interest and penalties you face on your debts. This increases your debt settlement requirements and potentially costs you valuable assets in the settlement process.
Taking on new debts may complicate matters
When you start considering bankruptcy, avoid taking on any new debt. Adding new debts just before you file could call the legitimacy of your bankruptcy into question. If the court interprets the actions as deliberate without the intention to pay, the judge might deny your bankruptcy.
Transferring assets can cost you
You might consider transferring some of your assets to family or friends in an effort to keep them out of your bankruptcy. The judge may interpret this as fraudulent behavior as it leads to an understatement of your assets and reduces the amount available to liquidate for debt settlement.
Most bankruptcy attorneys advise clients to make cautious, responsible and conservative decisions leading up to a bankruptcy filing. Avoid changing your financial position, assets or debts to reduce the risk of denial.