Although bankruptcy can be complex, most people can avoid a bankruptcy dismissal if they follow the rules of the law. Here are 8 tips to help you avoid the common bankruptcy mistakes that can ultimately end in a case dismissal.
- Find a Good Bankruptcy Lawyer
The most important ingredient to a smooth bankruptcy case is a good bankruptcy lawyer. Bankruptcy lawyers are familiar with the process and your state's bankruptcy laws, and may be your greatest asset during bankruptcy. A good bankruptcy lawyer not only helps you file correctly, but deals with any complications that arise during your filing. - Stop Procrastinating but File Your Bankruptcy as Soon as You Can
Rushing to file your bankruptcy is just asking for trouble. But gather your information and documents--income (tax returns, pay stubs, W-2s, 1099s, etc.), expenses (copies of your bills showing balances and payments), and assets (bank and brokerage statements, vehicle information and current worth, and list art, jewelry, and anything else that could be sold to repay creditors). Get copies of your credit reports so you don't leave out any creditors, such as collection agencies. Bankruptcy courts require a lot of documentation and processing, so take the time to do a correct bankruptcy filing. - Be Honest With Your Bankruptcy Lawyer
Bankruptcy is definitely a tough situation, and sometimes people can't help but feel embarrassed. Remember though, bankruptcy lawyers are there to help and there is no need to hide information from your lawyer. Be honest about your debts, assets, income, and any other information. If you want the best help from your lawyers, you have to give them the entire story. - File the Right Chapter of Bankruptcy
To ensure your case doesn't get dismissed, it's important to file the right bankruptcy case. To be eligible for Chapter 7 liquidation for example, there are certain income and asset requirements that must be met through a means test. If you file for a chapter of bankruptcy which you are not eligible for, your case will definitely be dismissed. - Don't Lie When You File For Bankruptcy
Typical occurrences that lead to bankruptcy case dismissals are the misrepresentation of existing debts, assets, and income. If the bankruptcy court discovers these inconsistencies, your entire case may be jeopardized. For example, if you have interest or dividend income on your tax return, and you don't list the asset which produced that income, you will have some explaining to do. Review these numbers because even an honest mistake can be grounds for a case dismissal. - Don't Try to Outsmart (Defraud) the Bankruptcy Courts
Bankruptcy can leave individuals feeling cornered, but it's important not to resort to unethical tactics to gain an unfair advantage. Avoid running up credit cards before filing, and no transferring or hiding your assets or liquidating your retirement funds before bankruptcy. Not only are these acts grounds for dismissal of your bankruptcy case, you could be prosecuted by the law for this attempted fraud. - Don't Forget To Make Your Bankruptcy Plan Payments
If your bankruptcy case involves the repayment of debt, required for example in a Chapter 13 filing, don't miss these scheduled payments. Missing one can cause the dismissal of your case and remove the protection of your assets--putting them at risk with your creditors. - Keep in Contact With Your Bankruptcy Lawyer
While finding a good bankruptcy lawyer is important to your case, it'll go to waste if you don't keep in touch throughout your case. Times may be tough, and you may be stressed, but a common complaint from bankruptcy lawyers is the lack of communication with their clients. It's easy to forget the little things in bankruptcy like the required credit counseling classes or the meeting of creditors with trustees; by staying in contact with your lawyer you'll be less likely to forget these little details of bankruptcy.
About the Author:
Heindrick So works for a Bay Area Real Estate company that specializes in residential wholesale lending. His work experience is comprised mostly of sales and marketing background which included a high end media sales position at Magnolia Hi-fi. Heindrick is also in his final year of pursuing his Bachelor's Degree in Electrical Engineering at San Jose State University.
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