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Common Mistakes of Filing for Bankruptcy

Anyone who files bankruptcy does it for a single reason, and that is to get a fresh start. And while you might be thinking about doing it on your own to save money, you could end up wasting a lot of time and effort without achieving the results you want. That’s because there are a lot of potential mistakes you can make when you choose not to hire a reliable bankruptcy lawyer in Baltimore, Maryland. Let’s talk about some of these mistakes.

Choosing the Wrong Type of Bankruptcy

There are several types of bankruptcy, and each has different processes, requirements, and results. For Chapter 7, your creditors will be paid by liquidating your non-exempt assets. While for Chapters 11 and 13, you will be following a payment plan that lasts for 3 to 5 years in which you will be expected to repay all your debts. 

If you file under the wrong chapter, your petition will not only get rejected but will also end up wasting your time. So instead of trying to determine which type of bankruptcy to file on your own, you will be better off asking for help from an experienced bankruptcy lawyer in Baltimore, Maryland.

Repaying Business Associates, Friends, or Family Members before Filing Bankruptcy

If you do this before filing bankruptcy, the money you paid can be considered as preferential payments. These are recoverable by a Chapter 7 trustee, while a Chapter 13 trustee may choose not to recover but instead allow them to pay the given amount in a repayment plan.

Adding to Credit Card Debt before Filing

The “presumption of abuse” period is the 75-day duration before you file for bankruptcy. During this time, any major purchases that transpired (especially if transacted using your credit card or a cash advance from a credit line) are considered to have been made at a time when you could not have reasonably paid the balance back.

But just because that is the case does not mean you should buy anything you want during that time because creditors can and will surely file lawsuits to stop those debts from being discharged. Also, making larger and unusual purchases during that time can get you accused of committing fraud.

Transferring Properties to Another Person before Filing

Some people believe that if they transfer their assets to someone else before filing bankruptcy, then no one can go after those assets. This is most likely done to avoid liquidation of the asset by the courts to repay creditors. However, that is not the case. In fact, if you intentionally transfer properties (especially to family members), you could be accused of committing fraudulent behavior.

Filing Too Close to an Important Life Event

Filing bankruptcy too close to your wedding is an example of this case. While single, bankruptcy courts will only scrutinize your income. However, once you get married, they will also consider your spouse’s income and assets. However, your filing could be rejected, considering that your financial information has suddenly and drastically changed. If not, you will become eligible for a different type of bankruptcy.

You should also avoid filing bankruptcy if you are expecting to receive an inheritance, insurance payout, settlement, or other large sums of money. That’s because you might end up handing it all over to the bankruptcy trustee.

Instead of filing on your own, you should definitely consider getting the help of an experienced bankruptcy lawyer in Baltimore, Maryland, like Atty. Richard Hackerman. With his help, you will minimize potential risks and get your case approved much faster.

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