Mistakes To Avoid When Filing Chapter 13 Bankruptcy

Chapter 13 bankruptcy allows you to make payments within a period of three to five years, and these payments are distributed to creditors. If there are assets you want to keep and you earn a significant income, Chapter 13 is suited for you. Here are some mistakes you should avoid when filing Chapter 13 bankruptcy.

Violating Bankruptcy Disclosure Requirements

Under Chapter 13 bankruptcy law, you're required to disclose your financial situation in the bankruptcy paperwork before you can get any benefits of bankruptcy. The courts will make sure the creditors get a fair share by reviewing the worth of your past financial transactions.

People who file for bankruptcy are required to report their past transactions on a Statement of Financial Affairs for Individuals Filing for Bankruptcy form. Suppose the court finds that you transferred the property to avoid paying your creditors or violated any other bankruptcy laws. In that case, the court will reverse the transaction and hand over the recovered funds to your creditors.

Ignoring the Timing

Timing is everything when filing for bankruptcy. If foreclosure, wage garnishment, and repossession are imminent, you should file immediately. However, if you're filing because of medical bills and there are more to come in the future, you need to wait since your bankruptcy filing will not cover new debts.

Also, big tax returns may affect your chances of succeeding in filing for bankruptcy. You may also want to file when a creditor sues you. For example, if your creditor accuses you of fraud, you should file for bankruptcy before the case is finalized because you'll not be able to get exempted from the debt in bankruptcy. Consult your Chapter 13 bankruptcy lawyer to determine the ideal time to file.

Adjusting Your Exemptions, Allowing You to Earn a Higher Net Income

If you adjust your exemptions, you'll have a high income; meaning you'll receive more cash after tax deductions. This is because you're paying low taxes. The problem is that you'll have a big IRS tax bill. You cannot declare bankruptcy with this new tax bill. This translates to bigger financial problems for yourself. 

Failing to Attend Meetings and Court Hearings

Before filing for bankruptcy, you're supposed to go through a credit counseling course. You'll have to provide a certificate of completion to the court. The court could overrule your case if you haven't completed this course.

Additionally, you're supposed to meet creditors after filing for bankruptcy. During this 341 hearing, your creditors and a bankruptcy trustee will question you under oath. The court can dismiss your case for failing to attend this meeting.

Keep these tips in mind when looking for a bankruptcy lawyer near you.