Filing for bankruptcy isn’t an easy decision and it’s also not something that many people understand.
So, it stands to reason that most people might make a mistake or two before filing for bankruptcy.
It doesn’t have to be that way, however. With a little knowledge and some planning – and the help of a competent bankruptcy attorney, you can avoid these common mistakes, move forward and secure a fresh start.
One of the biggest mistakes people make before filing for bankruptcy is to try to pay down their debt using a home equity loan or their retirement accounts. These methods can be costly. Why? Because some debts are unsecured (like medical debt or credit cards) so if you can’t pay, your creditors can’t come after you unless they sue you in court. But you can lose your home equity or even home if you use a home equity loan to pay off unsecured debts because your creditors can come after your home as an asset – meaning foreclosure.
And dipping into retirement funds is never a good idea, due to withdrawal penalties and the amount of time you’ll need to build them back up again.
It’s a big mistake to transfer, sell or give away your assets right before you file bankruptcy. Why? Because the trustee who is assigned to your case could see this as fraud and try to get the assets back – a major headache for all involved.
There is never really a good time to file for bankruptcy but there can be a wrong time to file. Like, right around tax season. If you are expecting to get a tax refund, try to hold off on filing. That way, you can keep your refund and not have it seized as an asset of the bankruptcy estate.
Trying to file for bankruptcy without a lawyer is a huge mistake. Sure, you can file on your own and try to manage the laws, deadlines, paperwork and the other ins and outs of the process on your own, but if you make a mistake, it could really cost you.
The No. 1 takeaway here is this: Don’t borrow money or take out loans to pay for your debts — especially if you plan to file for bankruptcy within 90 days.
If you have questions or concerns about bankruptcy law in Ohio, the legal experts at Mina Nami Khorrami LLC can help. Contact us today at 614-857-9590.