(Newswire.net — October 11, 2021) — When you file for bankruptcy, you’re actually filing a matter that will be heard in a court of law. Whether you file under Chapter 7 or Chapter 13, it’s important to have all your ducks in a row. Certain actions – including the ones listed below – can cause you to lose your bankruptcy case.
1. Taking out a loan right before you file for bankruptcy
Many people acquire a payday loan before filing for bankruptcy to cover court costs and pay some bills. However, doing this can (hurt) (ruin) your chances of getting approved for bankruptcy.
First, it’s morally questionable to take out a loan you may not be able to pay back. The judge might look at your recent loan and conclude that you took that loan with the intention of rolling it into your bankruptcy. This could make the judge skeptical of your entire situation.
Second, a creditor can challenge your request to have a debt discharged. If you just took out a payday loan, your creditor can and will challenge you by claiming you obtained the loan under false pretenses.
Finally, U.S. Federal law states that any debt acquired up to 90 days prior to filing for bankruptcy might not be dischargeable.
Bankruptcy costs money, but think hard before taking out a loan to pay for your court costs. Try getting the money from another source first.
2. Hiding assets
When you file for bankruptcy, you’ll be expected to sell your assets to pay your debts. Assets can include anything from collectibles and musical instruments to gold bullion and extra vehicles. Anything that can be sold for a chunk of cash is likely to be considered an asset.
If you try to hide your assets before filing for bankruptcy, it’s probably going to come out in the courtroom. For example, say you collect classic cars, and you transferred the titles to a family member two months before filing for bankruptcy. That’s going to hurt your case.
3. Making large purchases
You’ll damage your case if you make large purchases knowing you’re filing for bankruptcy. Whether you use cash or a credit card won’t matter. When you have debts to pay, and you’re buying things instead, a judge won’t look at that too kindly.
You don’t need to stop buying things you need to live your life, but avoid buying things like televisions, computers, expensive equipment, etc.
4. Posting on social media
Social media posts cause a lot of people to lose lawsuits. The problem with social media is that anything you post can be used against you in court. If you brag about buying expensive items on credit because you’re “going to file for bankruptcy anyway,” (then those specific charges can be contested in your bankruptcy and possibly determined to be non-dischargeable) (your case could be thrown out for fraud).
There are other ways social media can get you in trouble. For example, if you post selfies posing with your rent money to make it look like you’ve got a bunch of cash, the judge won’t know that was actually your rent money. The same goes for taking luxury vacations.
Also, your social media account is likely full of posts and pictures of your assets. If you don’t list all of your personal property when you file, anything you omit can be verified on social media.
5. Filing under the wrong chapter
There are two types of bankruptcy you can file for – Chapter 7 or Chapter 13. Filing under the wrong chapter could make you lose your case. Although you can file again under the correct chapter, you’ll be starting over from scratch, and you’ll incur even more expenses.
Chapter 7 bankruptcy will discharge all of your eligible debt, and the court will sell your assets to pay creditors. If you don’t have any assets, your creditors won’t receive any money. To qualify for Chapter 7, you must meet specific income requirements. If you make too much money, you’ll have to file under Chapter 13.
Unlike Chapter 7, Chapter 13 bankruptcy doesn’t discharge your debts. Instead, you’ll create a repayment plan based on your income. This form of bankruptcy will cost more, but it might be your only option.
Talking to a bankruptcy attorney is the best way to determine which form of bankruptcy is your best option.
6. Not hiring a lawyer
Self-representation in a bankruptcy case isn’t a good idea. If you scour the internet long enough, you’ll find stories from people who have won cases pro se, but that’s hard. Don’t risk it – lawyer up right away.
Honesty is the best approach to winning your bankruptcy case
Being honest and transparent is the best way to ensure you’ll get approved for bankruptcy. The relief you’ll get will be worthwhile. If you end up losing assets, you can always buy them again later.