Bankruptcy in Michigan is basically like bankruptcies in other states. Several people make common mistakes when claiming bankruptcy. It’s common mistakes whether you are filing a chapter 7 bankruptcy or whether you filed a Chapter 13 bankruptcy and ended up in a 3-5 year bankruptcy plan. These are still common mistakes. This is where Bankruptcy planning comes into play.
Letting emotions control your decision on whether to file or not.
Bankruptcy is a financial and business decision. You can either not file and stay in debt or file and start rebuilding and getting on with your life. Emotions are usually tied to possetions and the feeling of financial failure. Don’t compound your financial stability by refusing to honestly look at your situation. Don’t make a bad financial decision by being in denial and facing the truth.
Withdrawing money out of your retirement to pay on debt.
This is huge and preventable. Chances are if you are resorting to pulling money out of these accounts you are in trouble and should really consider filing. Your retirement accounts such as a 401K is protected under bankruptcy law. Don’t take money out.
Taking a second Mortgage on your home.
If you have a large amount of debt that you cannot manage, taking out a 2nd mortgage may only delay the inevitable, and you will still have the 2nd mortgage to pay. This will end up with you either having a large payment that is difficult to manage or losing your home.
Hiding assets
Some people try to be smart and transfer property out of their names to avoid losing property or beloved possestions. Don’t do this, the trustee will find out and still take the property or force it to be sold. Additionally you don’t want to get nailed for trying to defraud the Government.
Keep charging on your cards or take out a loan after you decide to file bankruptcy.
Once you decide to file bankruptcy you must stop charging on your cards. Same with borrowing. Once you decide to file bankruptcy no more debt. Any charges / debt you incur may not be discharged in your bankruptcy. If you continue to use your credit cards after seeking advice from an attorney regarding bankruptcy. You may get nailed for whatever you charged and will have to pay them back.
Not Listing all of your property when filing bankrutpcy.
You are required to sign a petition when you are filing bankruptcy. If you forget to list something it can be perceived as fraud. You don’t want to make a situation worse by hiding your four wheeler or the new diamond earings you bought your wife or girlfriend.
Meeting with only one attorney
Several Bankruptcy sites leave this peice of advice out their services. You would’nt visit one store to by your plasma T.V. or visit one dealership to purchase one car. The same goes with an attorney. When visiting several attorneys you get a chance to build up confidence. If something goes down you know you want someone you trust and have confidence in.
Not getting all the necessarry paper work prior to filing.
You should get atleast 2 years of credit card statements prior to filing bankrutcy. Chances are you won’t use them. However, if you are close on the means tests and you have allot of unsecured debt and nothing to show for it . The U.S Trustee may want to see how all the debt was accumulated with nothing to show for it. Try asking for credit card statements after you filed for bankruptcy. The trustee will have to get a subpenoa to get them. Save yourself the headache and do it before you stop paying alltogether and filing. Sometimes you can print them from online. However, once you stop paying and file. Your online access is locked out and you wont be able to access them.
Not visiting a Bankruptcy Forum
Life becomes easier when you can talk to people in the same position as you. Forums are great sources for information and you are able to share your experiences. You are also able to ask questions and receive personal( not legal) advice from people who have been there done that. Only people who are filing or have filed will understand you. Attorneys are not there to treat you emotionally
Not learning from filing bankrutcy
People become attached to their FICO scores and where/what they were prior to filing bankruptcy. Scores do not define who you are. If you save and invest wisely your score will return. Do not make bad decions trying to raise your credit score. Time and paying your bills on time fixes credit, nothing else. It’s important for people to learn to budget after filing bankruptcy and also learn to invest wisely. One of the benefits of todays current economy is young people can learn from mistakes create their own investment plan that is recession proof. I would call it: My Recession Survival Guide, where you list the resources that were least effected during the past 5-8 years and how the current economy affected everyones 401K and retirement plans
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Comment by Bill Cash — January 2009 @ 12:44 am |