Have you considered filing for bankruptcy? If so, you likely understand that this is not a decision that should be made lightly. Though it undoubtedly has financial benefits in the considerable relief it can provide you, you’ll also find that it can have a considerable impact on your credit score. As such, doing everything in your power to make this process as effective as possible is critical. The following blog explores what you should avoid doing before filing bankruptcy and why working with a Memphis, TN consumer bankruptcy attorney is in your best interest during this process.
What Should I Avoid Before Bankruptcy?
Prior to filing for bankruptcy, there are many steps you should take to make this process as smooth as possible. From ensuring you attend credit counseling to meeting an attorney, it’s imperative to take the necessary steps during this matter. However, it’s also critical to understand the things you should avoid when you’re ready to file.
Generally, one of the most impactful mistakes people make prior to filing is making large purchases. They may assume that if they are filing for bankruptcy already, making expensive purchases with the intent of having the debt dismissed during bankruptcy is no big deal. However, it’s critical to understand that this is actually considered fraud. When filing, the court will look at your purchases within the previous 90 days. Even if you fully intend to pay off an expensive purchase, the creditor can successfully accuse you of fraud, which can impact the validity of your case. On a similar note, you should avoid making large transfers or gifting loved ones money, as this is also considered fraudulent behavior.
If you are preparing for bankruptcy and a creditor files a lawsuit against you, it’s critical to understand that this should be taken seriously. Many assume that because they are going to file, the lawsuit will be halted by the automatic stay. While this is somewhat true, as the automatic stay will freeze all collection activity against you, including lawsuits, the creditor can petition the court to lift the stay and continue the suit. Additionally, if you fail to respond in time, they can be issued a default judgment against you.
If I Want to File, Do I Really Need a Lawyer?
When you are considering filing for bankruptcy, it’s critical to understand that while you are not legally required to obtain the assistance of an attorney, it’s in your best interest to do so.
Bankruptcy is an incredibly complicated process, with many deadlines, copious amounts of paperwork, and stringent requirements. Making errors during this process can not only impact the financial relief you can obtain, but you may find that making certain errors can result in your case being dismissed. If you miss a deadline or are accused of fraud, the judge can toss your case and you will be barred from filing again for 180 days.
Unfortunately, many underestimate the importance of legal guidance when pursuing bankruptcy which can lead to less than favorable outcomes. When you’re ready to embark on this process, contact the Arnold Law Firm. Our team understands how complicated this process can be, which is why we are proud to help those in Memphis navigate bankruptcy to obtain financial relief. Contact us today for more information.
