When you are under huge debt, and there is no way to pay your creditors back, you may be considering filing for bankruptcy. While bankruptcy is often kept as a last resort, it can also help certain people. If you decide to file for bankruptcy, you must do it without making any mistakes.
The best way to make sure you do not make any mistakes is to hire a bankruptcy lawyer in Katy. The average person does not know much about the law, which makes them vulnerable to mistakes. Having a qualified professional by your side will give you more confidence.
Common bankruptcy mistakes that can put you in trouble
Using your credit card after you have filed for bankruptcy.
Do not make the mistake of using your credit card to buy luxury goods after you have filed for bankruptcy. If you think that these debts will get discharged, you could not be farther from the truth. Credit card debts incurred for luxury goods and services 90 days before filing for bankruptcy do not get discharged. Do not jeopardize your case by doing this.
Not choosing to file under the right chapter.
When filing for bankruptcy in Katy, it is crucial that you file under the right chapter. Filing under the wrong chapter could set you back. The best way to determine which chapter you should file under is to consult an attorney. You can read Internet articles to learn the law, but a professional can listen to your specific situation and suggest the best option.
Paying back relatives and family members.
You may want to pay back your family members and relatives before filing bankruptcy to avoid ruining personal relationships. However, these will be considered insider payments and can be recovered by the bankruptcy trustee in your case. The law does not allow preferential treatment when it comes to paying back creditors.
Liquidating your retirement account.
Retirement accounts are generally protected. You can only draw out money when you reach a certain age. If you draw money before that, you need to pay taxes and even a substantial fine. Do not drain your retirement account to pay back creditors. For starters, a lot of the amount will go into taxes and fines. Secondly, you won’t have anything left for your retirement days.
Borrowing more money after filing for bankruptcy.
After you have filed for bankruptcy, the worst thing you can do is incur more debt. Do not use your credit cards or take loans. It may be considered a criminal act to borrow money without the intention of paying it back.