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The idea of losing control over one's financial situation is scary. Yet, it is something that happens very often. The laws you will follow when filing for bankruptcy can be complex. Some people make mistakes that often lead to denial of their petition. If you are considering filing shortly, you should become more conscious of your spending habits. Here are four common errors people make before they file and how it complicates their process.
Stop Misusing Credit
Most people adopt the attitude that since they are already in debt, the situation will not change much when they buy one more thing with their credit card. Sometimes, this is an innocent move out of a lack of information. At other times, the mistake could get misconstrued by the bank as an attempt at fraud. For example, taking up massive debt before filing for bankruptcy raises eyebrows. The court might even turn down your petition because of your spending habits.
Enlisting Someone Else As an Heir
Being in debt is scary. When the debt collectors visit, people panic, go into self-preservation mode, and feel tempted to make moves that will help retain some assets. Another wrong move is transferring land and asset ownership to other family members. The court will view the mistake as a deliberate effort at fraud. It is crucial to know that the legal process works. A bankruptcy lawyer will pursue chapters that help you retain your valuable assets. The order also keeps the creditors away, preventing them from reclaiming your assets.
Skipping the Tax Returns
The court will want to access your tax return documents as part of the bankruptcy process. When you fail to file these returns, you will get in trouble with the federal government. Additionally, your petition is more likely to be dismissed if you do not have evidence of properly filed tax returns.
Overlooking Collection Activity
Being insolvent is stressful, and you might switch off from the reality of everything happening around you. One of the ways people disconnect is by turning down calls by creditors and overlooking any documents that hint at debt collection. You should hand over documents about the collection activity to your lawyer. They will know how to stop foreclosures and other debt collection activities.
Speak to a bankruptcy lawyer about your current financial situation if you feel that you might need to file for bankruptcy. They can help you assess your finances and determine the best way out of insolvency.
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