Bankruptcy offers a solution for those who get in over their heads with debt. If you can no longer meet your obligations, you might be thinking about filing bankruptcy to resolve those accounts. While it can help you address your debts, there are a few things that you should consider before you file.
There are some common mistakes that people make before filing for bankruptcy that could lead to discharge denial.
1. Do not open any more credit accounts
You might think about opening up and maxing out an extra credit card or two before you file for bankruptcy on the assumption that you can just include it on your bankruptcy filing. This is not the case. If you open a credit account and then file for bankruptcy shortly thereafter, bankruptcy courts treat that as fraud.
2. Do not pay off any debts
When you have decided to file for bankruptcy, do not pay off any of your outstanding debts. Whether you owe a friend or a local small business, making a payment to them is preferential treatment in the eyes of the court.
3. Do not skip any accounts in your reporting
Your bankruptcy reporting must include all of the outstanding creditors and assets that you have. You might want to leave one off the bankruptcy in the hopes of keeping that account active, but that is preferential treatment and can cause the court to refuse your discharge.
These are important things to consider when you are filing for bankruptcy. Protect your legal standing by keeping these tips in mind.