Financial trouble can feel overwhelming, and when traditional solutions fail, bankruptcy might seem like the only way out. However, before making that step, bankruptcy attorneys warn against making these crucial mistakes that could worsen your situation:

1. Hiding Assets or Lying on Forms

It might be tempting to transfer assets to friends or family, or try to downplay your income to make your financial situation appear worse than it is. Think again! Bankruptcy filings are legal documents. Providing incomplete or false information is fraud, with serious consequences, including fines and even jail time. It can also lead to your bankruptcy case being dismissed.

2. Racking Up New Debt Right Before Filing

Taking a last-minute shopping spree with your credit card before filing for bankruptcy is a huge red flag. Courts might see it as fraudulent, assuming you intended to get out of paying those debts. It may result in that specific debt being excluded from your bankruptcy discharge, meaning you'll still be on the hook for it.

3. Prioritizing Certain Creditors

The urge to pay back a kind friend or family member before going through bankruptcy is understandable. But, this can backfire. These payments are considered "preferential" by the court, and the trustee can demand that the money is returned to be distributed amongst all your creditors. This means your loved one won't receive any special treatment and you'll be back to square one.

So, What SHOULD You Do?

• Seek Professional Help: Speaking to a bankruptcy attorney is crucial. They guide you through the legal complexities, offer sound advice, and make sure you avoid costly mistakes.

• Be Honest About Your Finances: Complete transparency with your attorney and the court is vital. It allows for a smooth bankruptcy process and helps you rebuild your financial life.

• Focus on the Future: Bankruptcy is a chance for a fresh financial start. Learn from past mistakes and create a plan to responsibly manage your finances moving forward.

Important Note: Bankruptcy laws are complex. Seeking professional guidance from a qualified attorney is essential to navigate the process effectively.

Have you ever been tempted to cut corners when facing debt? What strategies have worked for you?