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Falling behind on your bills is stressful. If you are like most people, the idea of filing for personal bankruptcy protection can be a difficult one to think about. At the same time, it is important to understand that bankruptcy is a tool. It exists to help people resolve financial problems. At Resolve Law Firm, APC, we are committed to helping people and families secure their financial future. Bankruptcy may be the right option for you. If it is, you need to manage the process properly. Here, our Orange County bankruptcy attorney highlights seven common mistakes to avoid.
Mistake #1: Waiting Too Long to Get Started With the Process (Debt Grows)
With financial issues, a proactive approach is always the right approach. Indeed, delaying the decision to file for bankruptcy can worsen your financial situation. As time passes, debts will continue to accumulate—usually due to interest, late fees, and other penalties. That makes them all the more difficult to manage. For example, imagine you have mounting credit card debt in Orange County. If you postpone consulting a bankruptcy attorney for more than a year, your debts may jump dramatically during that time due to interests and fees.
Mistake #2: Filing for Bankruptcy Protection Without Exploring Other Options
Personal bankruptcy is a tool. It can be very useful to eliminate (or reduce) overly burdensome debt. Still, it is not the right option for every situation. Jumping straight into bankruptcy without considering alternatives can be a big mistake. Options like debt consolidation, negotiation with creditors, or credit counseling might offer faster, more cost-effective financial relief. It is always a great idea to consider all of the available non-bankruptcy debt relief alternatives.
Mistake #3: Not Knowing the Different Bankruptcy Options
Not all personal bankruptcies in California are the same. If you fail to understand the differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy, you may end up not pursuing the most advantageous option for your situation. Here is the basic difference between the two:
- Chapter 7 Bankruptcy: A Chapter 7 bankruptcy filing is a liquidation bankruptcy. It clears eligible unsecured debt. However, you must pass the means test to be eligible to file.
- Chapter 13 Bankruptcy: A Chapter 13 bankruptcy is a restructuring bankruptcy. It allows eligible debts to be rolled into a single monthly payment. It lasts three to five years.
For example, imagine you filed for Chapter 7 without realizing that it requires liquidating certain assets. If you owned valuable property she wished to keep, you may have been far better off filing for Chapter 13 bankruptcy protection instead.
Mistake #4: Opting for a Do-it-Yourself (DIY) Personal Bankruptcy
Bankruptcy is complicated. You do not need to try to take on the process—and all of the paperwork and filing requirements—alone. Indeed, dandling bankruptcy without professional guidance can lead to errors that may result in dismissal or denial of your case. The best thing that you can do if you are dealing with serious financial distress is to set up a free, confidential consultation with an Orange County personal bankruptcy lawyer. Your attorney will help you navigate the process. A DIY bankruptcy is often a very serious (and sometimes very costly) mistake.
Mistake #5: Failing to Carefully Organize All Financial Documents, Records, and Paperwork
One of the keys to a successful bankruptcy is organization. Indeed, disorganization can slow down the bankruptcy process. Incomplete or inaccurate documentation may delay proceedings or lead to unfavorable outcomes—potentially even the outright dismissal of your case.
As an example, imagine that you filed for bankruptcy in Orange County but you fail to gather all relevant financial records. During the proceedings, you will struggle to provide necessary documentation. The process will grind to a halt. You could end up facing additional costs.
Mistake #6: Transferring Assets Away Immediately Before a Personal Bankruptcy Filing
There are very strict rules and regulations under both California state law and federal bankruptcy law regarding property/asset transfers. Transferring assets out of your name before filing can be deemed fraud. It could lead to either civil or criminal sanctions. Further, bankruptcy courts may reverse transfers. As an example, imagine that a person gives an expensive car to their brother as a gift right before filing for bankruptcy protection in Orange County. That could be viewed as a fraudulent conveyance. The bankruptcy court may unwind that transaction (or worse).
Mistake #7: Not Proactively Working to Rebuild Your Credit Post-Bankruptcy
The goal of filing for personal bankruptcy protection is to protect your finances—both now and into the future. With that in mind, it is crucial that you exit the bankruptcy process ready to get things straight and slowly rebuild your credit. The Consumer Financial Protection Bureau (CFPB) explains that your credit score will be hurt by a bankruptcy filing—at least in the short-term. Ignoring credit repair after bankruptcy can prolong financial recovery.
Why Rely On Orange County Bankruptcy Lawyer Le’Roy Roberson
Bankruptcy can be an intimidating, overwhelming process. Unfortunately, too many people who are dealing with financial distress in Orange County make avoidable mistakes when seeking bankruptcy protection. As a top-tier California personal bankruptcy attorney, Le’Roy Roberson is standing by, ready to help you navigate every aspect of the legal process. During your free, 30-minute phone consultation, Attorney Roberson is prepared to review your case and help you understand if filing for bankruptcy protection—either Chapter 7 or Chapter 13—is the right choice for you.
Contact Our Orange County Bankruptcy Attorney Today
At Resolve Law Firm, APC, our Orange County bankruptcy lawyer is skilled, experienced, and committed to providing solutions-focused guidance and support to clients. You do not have to take on the personal bankruptcy process alone. If you have questions about filing for either Chapter 7 or Chapter 13, we are here to help. Contact us today to arrange your fully private, no obligation case review. Our team provides bankruptcy protection in Orange County and throughout California.
