From unexpected medical bills to divorce or losing a job, you may get to the point where bankruptcy provides the best solution.
According to the United States Courts, 399,269 people filed for bankruptcy in 2021. As you go through the process, you find yourself wanting to make big decisions. Ensure you avoid doing the following things.
1. Rack up more debt
Knowing that you already face a poor financial situation, the temptation exists to have one last hurrah. While you can still use your current credit card to purchase life necessities, getting more credit cards, buying luxury items or taking an extravagant vacation come with negative consequences. If done within 90 days of filing, your debtors may counter with fraud accusations. If that happens, the filing proceeding may get stopped dead in its tracks.
2. Transfer assets
If you have assets, you want to protect them. If you start transferring property or giving cash to relatives, you may actually harm your case. A bankruptcy requires full disclosure of assets. Hiding anything may result in an ability to file. Additionally, people often get to retain some personal property.
3. Skip paying taxes
Avoiding taxes only causes more trouble. Along with repercussions from the government, it also affects the filing process. If filing for Chapter 7, your income plays a key role in your eligibility. That makes having a tax return vital.
While you may feel frustrated with the situation, keeping a level head and getting the right advice may help ease the process.