Bankruptcy is a helpful tool to use if you have issues paying your debt. However, in the case of Chapter 7 bankruptcy, there are a few mistakes you need to avoid before declaring.
Chapter 7 is an excellent way to start fresh, though your credit score will take a substantial hit. Also, you can expect to lose any non-exempt property to pay your creditors. To ensure your debt forgiveness proceeds smoothly, avoid making the errors described below.
You cannot move assets
It is illegal to transfer assets before you file for Chapter 7. Doing so can get you charged with bankruptcy fraud. According to the Encyclopedia Britannica, fraudulent claims make up ten percent of bankruptcy filings in the United States. To avoid adding to this statistic, do not change the name on your bank account, remove your name from any joint accounts, transfer funds to someone else’s account or change the title on your car. Even business deals that seem legitimate, like deeding property to someone else, can get you charged with bankruptcy fraud.
Do not use credit
Chapter 7 is not an opportunity to run up your credit cards. Buying non-essential items before applying for debt forgiveness may result in debtors objecting to debt release. Your best option is to stop using credit cards altogether but stick to necessities if you must use credit.
Discharging your debt is not a get-out-of-jail-free card. Creditors expect a certain degree of accountability when they agree to debt forgiveness. Avoid making the mistakes mentioned above and consult with professionals about your options to solve your debt.