Filing for Bankruptcy: Costly Mistakes to Avoid

BankruptcyWhen you reach the stage of filing for bankruptcy you’re at a natural low point. What you don’t need is to make things more complicated by making bad financial decisions.

To save you additional monetary woes we outline below the most costly mistakes to avoid while filing for bankruptcy.

8 Avoidable Bankruptcy Mistakes

1 – “Forgetting” Assets

When filing for bankruptcy in California a number of people will attempt to avoid asset inclusion in their net worth assessment by hiding them, secreting them away somewhere, or flat out denying their existence.

Why shouldn’t you avoid declaring your assets? If you get caught you could get 5 years in jail, multiple fines, and a criminal record. It’s just not worth it for a single prized possession.

2 – ‘Gifting’ Family Members

Another strategy the sneaky have used to attempt to get a better bankruptcy deal is to gift assets or money to a family member. Not only does this invite bad karma into your life; it still means you are going to officially lose ownership of that item.

Again, if you own an item of value you must declare it, even if you have given it away. Otherwise you may need to face the full force of the angry law.

3 – By-passing Reading

Not reading the fine print probably helped get you into debt in the first place. Get online and do some reading. If you have landed on this page it is a great start – but you should know the law in your area. For example, you may be eligible for the Debt Relief Program in California; but you might never find out if you do not do your research.

4 – Tapping Retirement Funds

If you are lucky enough to still have some of your 401(K) or to have any retirement funds saved – then don’t tap into them for extra money. When filing for bankruptcy in California these are protected by law. If you leave them alone then so will the government.

Exempt retirement savings include:

♦ Your 401(K)

♦ Pension plans

♦ IRAs and Simple IRAs, including SEPs

♦ Keogh Pans

♦ Roth IRS accounts

5 – Property Evasion

When you transfer the ownership of property to family members, friends, or the homeless man on the corner, you are breaking the law. You are specifically forbidden from transferring the ownership of assets to external forces in order to ‘save’ them. Besides the jail term it is immoral, and may get your accomplice into hot water.

6 – Making Things Worse

Some people realize they are in terrible debt and gather more of it with the end goal of filing for bankruptcy. The IRS knows this game, they have played it more often than you have, and they are far, far better at it than you.

Accruing new debts and going on a spending spree is another punishable offence. More often than not it will get your application for bankruptcy tossed in the trash can.

7 – Using Up the Last of Your Credit Sources

At some point you are going to consider living off your credit card while the debts accrue. Don’t do it. To account for people doing this in the past; there will be a clause in your agreement with them that prevents certain debts being included in your application for bankruptcy. There is usually a time limit that applies on either end of your application.

Check the small print carefully and don’t run those debts up any higher.

8 – Doing It Yourself

There are certain things in life that are fine to do alone. Representing yourself when you are filing for bankruptcy does not fall into this category… not if your main aim is to save yourself money!

An Attorney will know the ins and outs of Californian law. They will know of all the little loopholes designed to make your life easier. They will save you on research time, get you the best repayment deals, and might even keep you out of jail… Don’t take the chance. Hire an attorney to represent you and don’t play risk with your finances.

Shift Frequency © 2019 – Costly Mistakes to Avoid

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