I see people every day in the Louisville area who are filing chapter 7 and chapter 13. Unfortunately, because of bad advice, because they make bad choices, or sometimes just dumb luck, they make lots of bankruptcy mistakes.
Here are some of the biggest ones and how to avoid them…
10. Tapping the 401(k)- most funds in 401(k) accounts cannot be disturbed in a bankruptcy proceeding. However, money taken out of one can. Also, the huge penalties and taxes associated with a recent 401(k) withdrawal are not dischargeable in bankruptcy. 401(k) loans also create some problems.
9. Cold checks- Some people think writing a cold check is great way to get a fast loan. Besides being a crime, cold check criminal prosecutions are not fixed by a bankruptcy filing. Don’t write cold checks. Bankruptcy can’t fix jail.
8. Using credit right before bankruptcy- obtaining credit or making charges too soon close to the date of your bankruptcy filing creates debts that may not be dischargeable.
7. Not paying child support/alimony- A chapter 13 bankruptcy can be used to get your child support caught up. However, in the mean time you can go to jail for not paying child support. If you have to choose between paying child support or a credit card- pay for your kids.
6. Doing it yourself- presently, there are more than a dozen banned bankruptcy helpers. Is yours one? How do you know? By the way, if you are getting any advice from her, are you ready to come to court to clean up her mistakes? Does she have insurance? Did you know that if you don’t file your bankruptcy documents properly you could lose your home and possessions? Get professional help with your bankruptcy or be prepared to hire professional help to clean up your bankruptcy.
5. The right representation- Does your attorney have malpractice insurance? How long has your attorney been filing bankruptcies? Is the lawyer you meet the same lawyer that goes to court with you? Has your attorney been sanctioned by the Bar? Do you talk to the lawyer about your case or a “legal assistant”? Can the lawyer tell you how your bankruptcy will effect your divorce? There is more to bankruptcy than filing out forms. If something is too good to be true it probably is. Hire a professional, not just a lawyer.
4. The truth- failure to tell your lawyer and thus the bankruptcy court the truth is a crime. Many times, failure to give the lawyer all information creates problems later- that could have been avoided.
3. Getting a judgment- If you don’t pay debt, chances are, you’ll get sued. If you file bankruptcy before a judgment, you don’t have to go throw the time and expense of getting rid of liens. Many times, I can’t get back money that has been garnished. A lot of times, the damage is already done. Filing bankruptcy gets it fixed sooner rather than later.
2. Not filing taxes- besides being a crime, unfiled taxes create a set of problems that could have been fixed but now in bankruptcy. If you owe, you owe, no use in putting it off.
1. Not calling us- as soon as you think you might need to file bankruptcy, get advice from a professional. Like traveling across a jungle- filing bankruptcy requires a guide. Let us help.