Avoid These Common Bankruptcy Mistakes

If you’re considering filing for bankruptcy, you probably have a lot on your mind. After all, bankruptcy can be confusing and stressful. However, the one thing you can’t do is allow yourself to get overwhelmed—this can only lead to mistakes. Luckily, by enlisting the help of a Milwaukee bankruptcy lawyer and reviewing the information below, you can drastically reduce your odds of making mistakes during the bankruptcy process. Below are some of the most common bankruptcy mistakes. 

Tips to Avoid Bankruptcy Mistakes

Using credit cards right before filing: Using credit cards right before filing for bankruptcy is a bad idea. Although some credit card use is permissible before filing for bankruptcy, you’re better off avoiding credit cards altogether. The reason being that if you overuse them, the bankruptcy court will make you pay them off, and this defeats the purpose of the “fresh start” that bankruptcy provides. 

Repaying friends and family before filing: If you owe money to friends and family, you may be tempted to pay them back right before you file for bankruptcy. Don’t do it. You can’t treat your friends and family any differently than you would a creditor when it comes to repaying debts. If you do, the bankruptcy trustee in your case may come after those you paid back to collect the money. 

Using 401K funds to repay creditors before filing: Retirement accounts are usually protected when you file for bankruptcy. In most cases, you can discharge your debt and keep whatever you have in your retirement account. You have nothing to gain by paying off debt with retirement account money before filing for bankruptcy. 

Taking out a second mortgage to pay off credit card debt before filing: Don’t take out a loan against your real estate before filing for bankruptcy. It’s often possible to file for bankruptcy and keep your home. However, if you take out a second mortgage to pay off credit card debt or to reduce the equity in your home, you may be putting your home at risk.

Failing to appear in court for debt-related matters: If you have court obligations related to your debt, you can’t simply stop showing up in court after you file for bankruptcy. Rather, you must wait until the court officially dismisses your collections case. 

Failing to be truthful with your attorney: If you plan on filing for bankruptcy, you need an attorney. However, you must be truthful with your attorney. An attorney’s representation is only as good as the information you provide, so provide your attorney with the most accurate information possible to ensure that your bankruptcy case is a success.  

Contact a Milwaukee Bankruptcy Lawyer 

If you would like to explore your bankruptcy options, you need an experienced Milwaukee bankruptcy lawyer on your side. At Hanson & Payne, we offer bankruptcy and debt negotiation services for individuals in Milwaukee and all over southeast Wisconsin. Please contact us today to schedule a consultation.