Before considering bankruptcy be certain you avoid the following common mistakes:
- Don’t transfer your property to someone else. Some people think they can protect property like homes, cars, jewelry and cash by giving it to a family member before filing for bankruptcy. A bankruptcy trustee may be able to reverse a transfer of property if it was made in an attempt to hide assets from your creditors. It’s often unnecessary, anyway, since exemptions may protect property like your home, your automobile, and your wedding rings.
- Don’t ignore pending lawsuits. Many debtors assume that if they’re planning to file bankruptcy, it’s not important to respond to or appear in court for pending lawsuits. Until your bankruptcy case is filed, any pending legal action will continue to move forward, and it’s important that you protect your rights–and protect your property from liens–until a stay from the bankruptcy court takes over.
- Don’t run up your credit cards or take out cash advances. Many consumers think that since their debts are going to be discharged, it doesn’t matter how much they charge today. Big mistake! Certain debts incurred within 90 days before filing for bankruptcy are presumed to be non-dischargeable. That means that if you use your credit cards recklessly before bankruptcy, you may find yourself obligated to pay those charges.