Spending sprees and other pre-bankruptcy filing mistakes

When you are under a good deal of stress, mistakes are easy to make, but here are five common missteps that could be damaging to your petition for bankruptcy.

Submitting an incomplete list of creditors

Skipping a creditor when you prepare your list may be a simple error given all the various bills you might have. On the other hand, you may want to keep a special account out of the mix. However, the law requires you to include all creditors when you file for bankruptcy.

Trying to hide assets

You may have an additional bank account you feel tempted to keep from view. You might consider transferring money to a friend or family member for safekeeping until you finalize the bankruptcy. Keep in mind that hiding assets is against the law. By doing so, you could jeopardize your filing, you might have to pay a fine and you could even face a prison sentence.

Repaying a family obligation

Perhaps you wish to repay a debt owed to a relative ahead of your filing because you do not want to include it in the bankruptcy process. The bankruptcy trustee may see that as a “preferential” payment and disallow it, in which case, your relative would have to return that money and pay it to the trustee.

Enjoying a spending spree

Many people think they can go on a spending spree before filing for bankruptcy. They reason that charging more debt to their credit cards at this point would not matter. Do not become a member of this misinformed group; the additional debt may not be dischargeable. Stop using your credit cards.

Not acting promptly

An experienced bankruptcy attorney will tell you not to delay filing for bankruptcy because your delinquent debts will just continue to snowball. You may have lost your job. You may be struggling under a mountain of medical bills. Whatever the circumstances, bankruptcy is a legal solution for getting out of debt. The faster you act, the faster you can enjoy a fresh new start for your life.