As an El Paso bankruptcy lawyer who has worked in this realm of law for many years, I have seen too many people make the same poor decisions again and again when filing for bankruptcy. If you’re planning to file for bankruptcy, or are seriously considering the option, be weary of the common mistakes people make that can often negate the process. As with any legal procedure, make sure you do your homework ahead of time–a combination of independent research and consultation with your El Paso bankruptcy attorney should ensure that you don’t merely assume that a debt relief decision is, in fact, the right one.
Here are some common mistakes you’ll want to avoid when filing for bankruptcy:
Don’t wait until repossession or foreclosure. Waiting until you’ve already lost your home, car, or worse, before filing for bankruptcy is a big mistake. Don’t let your home go into foreclosure over credit card or medical debt. These unsecured debts can be eliminated with bankruptcy. Why not file for bankruptcy and keep the assets you’ve worked so hard to earn?
Don’t dip into your home equity. Your home is not an ATM machine. Many people sidestep or put off bankruptcy by getting a home equity loan. People use money from a lien on their home to pay off unsecured debt. When they cannot afford the repayments, they end up losing their homes. When you trade in that unsecured debt for debt on your home, you risk foreclosure, which is much worse than being harassed by creditors. Contact your local El Paso foreclosure attorney for more information.
Don’t leave out any creditors when you file. You can’t get relief from a creditor you do not include in your bankruptcy paperwork. This one’s a no-brainer, yet many people make this mistake.
Don’t withdraw from your retirement early. Our team of El Paso bankruptcy lawyers see this all the time. Many people evade bankruptcy by using their retirement savings to pay off credit cards, medical bills, and other unsecured debt. If you qualify for bankruptcy, such debts can be reduced or even eradicated completely. Is risking your retirement worth paying off outrageous credit card bills? Not if you qualify for bankruptcy.
On the day you file, don’t have a large sum of money in your bank account(s). If you have more than a nominal amount of money in the bank on the day you file for bankruptcy, it may not be exempt from creditors. Take the money out, and then go back to normal banking several days after you file your case.
Don’t go wild with credit card spending. The purchase of luxury goods exceeding $500 each within three months before bankruptcy or cash advances within 70 days of filing are presumed to be obtained under false pretenses. Furthermore, it is not unheard of for credit card companies to examine similar transactions made within the past year year in order to claim that you obtained the money through false pretenses or fraud.
If you’re expecting a tax refund, don’t file. Your exemption for tax refunds is limited. Contact an El Paso bankruptcy law office for more information.
Don’t fail to show up at your hearing. If you do not attend what will likely be your only hearing (and bring a Social Security Card and photo I.D.), your case could be dismissed.