Many people file for bankruptcy here in the Dallas Fort Worth Texas area, so they can get back on their feet and settle their financial affairs as peacefully as possible. However, the fresh start you are hoping for can be hindered because of easily avoidable blunders during the actual filing process. Below are some of the most common mistakes to watch for.
Filing the Wrong Type of Bankruptcy
Selecting the right kind of bankruptcy will greatly depend on your capacity to pay, financial circumstances, and long-term and short-term objectives. You can choose Chapter 7, which may or may not cause you to have liquidate assets in order to pay creditors depending on whether or not your assets are exempt. Chapter 13 which will help you create a steady payment plan based on your income.
One of the first mistakes many people make is selecting the wrong kind of bankruptcy. In doing so, they tend to waste time, effort, and money without being able to settle anything. You can avoid this by having your bankruptcy attorney fully assess your situation and recommend the better option.
Transferring Assets Out of Your Name
Out of fear or in an attempt to secure their properties such as homes, cars, and valuables, some people rush to sell or transfer property to the ownership to family before declaring bankruptcy. This can be seen as fraudulent and can even be reversed. Do not transfer or sell property right before bankruptcy. Instead, talk to an attorney about pre-bankruptcy planning.
Paying Back Family or Friends 1st & Ignoring Other Creditors
We understand the pressure that you might be bearing when in debt especially when your creditors are family, friends, or someone in your neighborhood. However, you cannot choose which creditor is better or should be prioritized over the other. Paying others before filing for bankruptcy might be seen as a preferential payment, and you might be asked to return the money to the trustee.
One common misconception about bankruptcy is that many people think that they will be free from their debt without actually paying the debt back. As a result, they can carelessly spend and further bury themselves in debt.
Learn more about the right process of filing for bankruptcy by visiting our blog again for more insights. For more comprehensive legal advice, please call us here at Sherman Law Firm, P.C. and schedule a free consultation.