Financial struggles are part of life. Filing for bankruptcy makes sense when they become too much to handle. This path allows people to settle past mistakes and start over.
There are right and wrong ways of approaching the bankruptcy process. Knowing what to avoid is essential to achieving an optimal outcome.
Mistake #1: Selecting the wrong type of bankruptcy
There are huge differences between filing for Chapter 7 and Chapter 13. Chapter 7 is the most direct route to eliminating personal debt and ends in several months. Chapter 13 establishes a payment plan that lasts between three and five years.
Changes in bankruptcy law sometimes happen, which can further complicate the decision. The wrong filing can cause a rejection, sending the petitioner back to square one.
Mistake #2: Accumulating further debts before bankruptcy
Legally speaking, the 75 days before someone files is part of the insolvency period. Purchases and cash advances during this time are subject to lawsuits from creditors. Thus, the time to apply for credit cards and resume making purchases comes afterward.
Mistake #3: Marrying someone in the lead-up to bankruptcy
Loving someone is a separate matter from tying the knot. Feelings aside, marrying combines finances between two parties. The spouse not filing for bankruptcy subsequently becomes vulnerable to fiscal scrutiny. This is bound to cause conflict during what should be a joyous time.
These are just some of the bankruptcy errors one can make. Gaining a complete understanding of the bankruptcy process before filing remains incredibly wise.