Mistakes to Avoid When Filing For Bankruptcy
Bad financial decisions may be the reason that leads to file for bankruptcy. Therefore, it is vital to be extra cautious when you’re about to or have already filed for bankruptcy to avoid further problems.
Filing for bankruptcy gives you peace of mind in one of two ways. One, either the debt you owe will be paid or you’d be given an opportunity to reorganize your financial game and produce a repaying plan to creditors that seems promising. However, this luxury is lost to many people who are in debt because of the silly mistakes done during the filing process.
Here are a few common mistakes that you need to avoid when filing for bankruptcy:
Choosing The Wrong Time File For Bankruptcy
The most common mistake that a lot of debtors make is file for bankruptcy at the wrong time. This may result in rejection from the court’s side and you’re on your own to deal with the creditors. This happens when you fail to wait for 8 years before filing for another petition. The rule is that one cannot file for bankruptcy for at least 8 years if they had previously filed one and got it discharged. This is applicable for chapter 7 for bankruptcy.
As for chapter 13, the waiting time to file for another bankruptcy is 6 years.
However, it is not recommended to have past bankruptcy filing cases because it implies that you aren’t good at managing money.
Not Fulfilling The Income Requirement
If you’ve been thinking that filing for bankruptcy only takes $335 and $310 (for chapter 7 and chapter 13) then think again. Your annual income is closely considered that you’ve been earning for the past six months and if doesn’t meet the requirements then you may not get a approval from the court’s side.
It often refers to as the means test where your income, financial records and credit reports are reviewed. The debtor’s six month’s income is doubled and compared to the median income of a household that’s the same size. It varies from state to state. If the income you earn is less than the median income set by your state then you qualify to file for chapter 7 bankruptcy, otherwise, you may have to look for other options.
Therefore, make sure that you file for bankruptcy when you think that you income statistics will mark you eligible to file for bankruptcy.
Choosing The Wrong Type Of Bankruptcy
There are many types of bankruptcies which are referred to as chapters. Each has different eligibility criteria and outcomes. Debtors should hire attorneys to advise them on which is the most suitable chapter for them to file but a lot of them fail to do this and end up filing for the wrong chapter.
For example, if you file for chapter 11 bankruptcy, you may not be able to save your assets. This mostly happens due to a lack of knowledge when it comes to dealing with bankruptcy chapters.
It is vital to be patient and hire an attorney to recommend you a chapter that you’re eligible for so that you don’t end up wasting money and time.
Not Giving Importance To The Credit Counselling Course
The debtor who files for bankruptcy is required to undergo a credit counselling course before 180 days of filing. This is mandatory for all kinds of bankruptcy chapters. Failure to do so can result in disapproval and mark you ineligible for the bankruptcy application.
The court needs to see a certificate of completion which proves that you took the course and completed it.
These mistakes need to be avoided at all costs when you’re filing for bankruptcy. Moreover, you should also look into how to file for bankruptcy so that the chances of making errors are minimized.