Common Mistakes

Common Mistakes

There are some common mistakes made before and during the bankruptcy process. Here is a short list of them:

  • Repaying money to relatives

    If you repaid a relative in the year before you filed for bankruptcy, court can require that person to return money distributed, and redistribute those funds equally to your creditors.

  • Hiding creditors

    List every person or company to which you owe money. You cannot discharge a debt that is not disclosed on your list.

  • Transferring Assets

    You cannot shift assets to a child's name or give them to a relative just before you file for bankruptcy.

  • Concealing Assets

    Bankruptcy laws require that you fully disclose all of all assets. The FBI fraud division, IRS auditors, and the U.S. Trustee examine bankruptcy filings. Even if your assets are not listed in your paperwork, they will be found. It is a federal crime-a-felony, to commit bankruptcy fraud. Do not attempt this.

  • Credit Consolidation

    The airwaves are inundated with consolidation companies promising to help you "avoid bankruptcy." However, even if you negotiate lower payments or restructure your debt outside of bankruptcy, your credit score will be adversely affected and you could incur tax liability. Remember, too, that "not-for-profit" doesn't mean "free." These organizations are often funded by banks and the credit card industry to try to collect as much money from you as possible.

  • Introduction to Bankruptcy
    Do you need a fresh financial start? Are you being hounded by debt collectors? You are not alone. Almost 1.5 million individuals file personal bankruptcies every year in the U.S. It has been a long-standing element of American law that an individual can file for bankruptcy and obtain a fresh start...
    read more
  • Types of Bankruptcy
    For individuals, there are two basic types of bankruptcies : chapter 7 and chapter 13. An individual may file for bankruptcy under Chapter 7, which is sometimes called "fresh start" or a "liquidation" bankruptcy. In a Chapter 7 bankruptcy, an individual may keep certain kinds of property (called "...
    read more
  • Who Can File For Bankruptcy?
    Generally, anyone can file for bankruptcy. However, not everyone qualifies to file for a particular kind of bankruptcy. If you are an honest person who can't afford to pay your bills, you can qualify for bankruptcy. If you have previously filed for bankruptcy, it may affect your options. For...
    read more
  • The Process
    There are eight common elements in obtaining a bankruptcy discharge (i.e., eliminating or reducing your debts, or planning their repayment), although the details of these may vary depending on your situation. The attorney you find through LegalZoom will help you with the entire process which takes...
    read more
  • Pre-Bankruptcy Credit Counseling
    Before you can file for bankruptcy, you must first consult a nonprofit credit counseling agency approved by the United States Trustee's Office. This consultation may show you if there are alternatives bankruptcy that would work for you.
    read more
  • Bankruptcy Reform
    Congress changed the bankruptcy laws significantly in 2005, making it more difficult for individuals to file for bankruptcy. However, bankruptcy relief remains available to those who qualify. Some important elements to the revised bankruptcy laws are:
    read more