The bankruptcy mistakes every debtor should avoid

The bankruptcy mistakes every debtor should avoid

When filing for bankruptcy, you should work hand in hand with your attorney to learn about the entire process to make it stress-free. For your case to run smoothly, you must avoid some costly mistakes that can cause serious repercussions. Avoiding the following mistakes can keep you from being on the wrong side of the law.

Signing documents without reviewing them

You have to file a lot of documents in court detailing all your debts, assets, expenses and income when filing for bankruptcy. You will have to sign other documents issued by the court. Take time to review each document to avoid giving inaccurate information. Lying can make you lose your discharge or even future assets.

Withholding information

If you hire a bankruptcy attorney, you have to disclose all the relevant information regarding your assets while filing for bankruptcy. Make sure they have all the relevant documents, facts and figures to help you ease the process. Withholding certain information can be taken as a breach of the law and can land you into serious problems. Apart from your lawyer, your trustee may still need additional details. Do not ignore their questions or obstruct them from doing their jobs since you can be prosecuted for such.

Failing to meet with your creditors

As a debtor, you should prioritize meeting with creditors. If you get caught up and cannot attend the meeting in person, inform your lawyer beforehand so that they can represent you. Some creditors allow you to participate in the meeting through telephone if you are out of the country or away for work. Do not however make it a habit of not attending these meetings.

Concealing assets

This is a common mistake that most people who file for bankruptcy get prosecuted for. Concealing assets when filing for bankruptcy is a crime. If you hide some of your assets or organize to transfer them to someone else during the process, you can receive a fine for it or even get detained.

Filing different cases

People look for different ways to prevent their property from being repossessed. It is, however, a mistake to file multiple cases since the court works with limits. For instance, a person may file for bankruptcy to prevent creditors from foreclosing their home. The first time, the court can consider preventing creditors from repossessing the house. If the person fails to make repayments and faces foreclosure again, they may file for bankruptcy for the second time. In this case, the court may fail to consider the person’s automatic stay request.

Neglecting your debtor education course

If you are a debtor with a case in chapter 13 or 7, you are supposed to take an education course before the court issues a discharge. Failure to take the course can make the court dismiss your case without issuing the discharge. To reopen the case, you may incur extra fees of paying your attorney and also the court. To avoid this, make sure you take the course to get your discharge.

How does bankruptcy affect your credit score?

Most people hold back on declaring bankruptcy due to the effect it has on their credit. It can remain on your report for many years and deter you from applying for loans due to poor credit. Though this is true, if you don’t file for bankruptcy and let your debts go to collections, you can worsen the situation.

A bankruptcy attorney can assist you through the process. They can help you understand chapter 13 vs. 7 bankruptcy. In as much as bankruptcy lowers your credit score, it becomes less crucial over time if you start practicing good financial habits and try to establish new credit after filing. Use the following tactics to improve and manage your credit score after filing for bankruptcy.

Monitor your credit score

You need to monitor your report after filing for bankruptcy closely. Check the lists of debts that are included in the bankruptcy and keep track of their status after the court discharges your debts. Your debts should show a £0 balance if you filed Chapter 7 bankruptcy. Talk to the credit report issuer to make the necessary changes if the report contains inaccurate information. Do not forget to confirm with your original lender.

Try to re-establish credit

We mentioned that bankruptcy remains in your report from 7-10 years depending on the type you file. If your account is not that old, it appears as if you don’t have any credit. After your bankruptcy is discharged, you should, therefore, make sure you apply for credit to help you rebuild your score and re-establish your credit history.

You can do this with the use of secured credit cards or store credit cards. It is easy to qualify for such cards since they come with some few requirements. Beware of the hefty fees and rates associated with them and go through the disclosures before your application. Try applying for a car loan six months after completing the bankruptcy.

Maintain your old accounts

You can boost your credit history by letting your old accounts remain intact and active. Most of the people who declare bankruptcy has good credit before getting into tough financial situations. If this describes you, old items in your report can help your credit score even if you file for bankruptcy.

Avoid applying for multiple accounts

Applying for new accounts can affect a certain percentage of your credit score. In as much as experts advise you to apply for new credit after bankruptcy to rebuild your score, do not open numerous accounts. When applying for a big loan such as a mortgage, ensure you spread out the application over an extended duration. Applying for minimal accounts can also help you manage them effectively to avoid irresponsible financial habits.

Filing for bankruptcy should not be the end of your financial growth. You can still apply for a loan or new credit cards like any other individual. If your credit score is poor due to reduced limits and multiple payments, it is better to file for bankruptcy instead of staying in that situation. Try implementing the strategies above to help you get back on your feet.

How to delay the process of foreclosure

Are you about to lose your home? Foreclosure can be scary for anyone. Getting the notice should not make you despair and give up that easily. You can do certain things that can slow down the process as you try to get back on your feet. Foreclosure occurs when you breach the contract of paying back your mortgage in full. A lender can repossess your home and look for ways to recoup the investment if you are unable to settle your loan.

The bank may take some time before repossessing your home. They give you a two week grace period for you to make repayments. Foreclosure proceedings only begin after 90 days if you still don’t make it pay for the mortgage. The process of repossessing a home is long since it can take up to a year. You should take advantage of this duration to make the necessary changes so that you can save your home from being repossessed. Use the following techniques to prolong the process.

Be informed

You need to learn more about the process of foreclosure. Instead of panicking, take your time to read through the documents you get from the lender. Most notices regarding late payments contain details on how you can prevent foreclosure. You may also receive mail that informs you of the pending legal action as well as the foreclosure process.

Know how the process is handled in your particular state. In some states, the lender must sue you in court before beginning foreclosure proceedings. This only happens in judicial foreclosure states. Understanding the laws of your state can help you estimate how much time you have to get a solution.

Talk to the lender

Get in touch with the lender to try and find common ground. Repossessing a home is a tedious process for all the parties involved. Open communication with your lender can help you find a solution to the problem. A lender can provide different options such as refinancing, repayment plan or loan modification.

Refinancing is when a lender gives you a new loan with new terms and interest rates to help you cover the payments that you missed on the mortgage. You can also work together to come up with a repayment plan that suits your budget for you to start making payments gradually. They can also modify your loan by changing the terms of the mortgage to make it more manageable. For instance, they can reduce the interest rates or extend the duration of payment.

Think about filing for bankruptcy

If the other options do not work, filing for bankruptcy can prevent you from losing your home. Seek guidance from a bankruptcy lawyer or attorney to take you through chapter 7 and 13 to delay foreclosure.

By filing for bankruptcy, the court is forced to issue an order for relief which includes automatic stay. This can make your creditors cease any collection activities instantly. The court legally postpones the foreclosure for a couple of months so that you get enough time to fight for your home as you look for alternatives to make repayments. 

If you are ready to file for bankruptcy, you will need this to find the right attorney

Sometimes life does not turn out as we expect. If you are struggling to pay your debts, one of your options would be to file for bankruptcy. You need to hire the right attorney to take you through the process and simplify it. Looking for the right bankruptcy attorney can be challenging when you want to remain discrete about your financial situation.

Most people choose to search for bankruptcy lawyers from online sources rather than consulting friends due to protecting their privacy. It is a serious step that needs excellent advice. You should, therefore, look for the right representation from a bankruptcy attorney who has experience in the field. Use the following criteria to choose such a lawyer.


Most bankruptcy attorneys are members of the National Association of Consumer Bankruptcy Attorneys. This should be the first sign of professionalism you should be looking for in a lawyer. It indicates that such a lawyer is committed to their job. A good bankruptcy lawyer should offer you competent representation.

Check the website of different lawyers to confirm if they are certified. A good lawyer should have years of experience in the field. They should have also have passed the written exams in the specialty. Having practical knowledge in the field is crucial since your attorney can make the right decisions if anything goes wrong during the process.

Once you have identified a couple of attorneys through their websites, you should fill out the downloadable forms to help you determine if your financial situation makes you qualify for bankruptcy. Get appointments with a few lawyers to secure one that you are comfortable with. Come up with a list of questions and present them to the lawyers while vetting them.

They should suggest alternate resolutions

An ethical bankruptcy attorney should present you with options to help you solve your financial situation. Filing for bankruptcy should be your last option since it can harm credit score. They should help you weigh your options and give you great advice on the best course of action to take.

The right bankruptcy lawyer displays passion

Choose an attorney that shows the passion for the process and occupation. You can try to find out why they specialized in the field. Most of them find the job rewarding and fascinating.

They should show empathy and be understanding

Declaring bankruptcy is painful for most people. Due to the emotions involved, you need an attorney that does not only understand the law but also displays the desire to understand your goals and specific situation. They should empathize with you and try to understand your case by asking relevant questions. Hire a bankruptcy attorney who can address your worries and respects you.

Consider the fee

Attorney fees range from £800-2500 depending on the complexity of the case and location. Do not hire the lawyer with the lowest fee nor the one with the most expensive rates. Let the above qualities guide you in getting the right bankruptcy attorney before considering the cost.

A bankruptcy attorney shares insights on how to avoid bankruptcy

It is almost impossible to live without incurring some debts. With the tough economic times, debt can sometimes be overwhelming. If you are thinking of filing for bankruptcy, think about how bad it might impact your credit score. Bankruptcy experts say that there are always other alternatives to save you from such serious decisions and save your credit rating. Consider the following options and avoid bankruptcy.

Sell some assets

Consider selling off some of the assets that you can live without so that you can use the funds to settle your debts. Do this as soon as you notice that you are struggling with payments. Do not wait for due dates to pass for you to start considering this option.

Take advantage of online business platforms to get a ready market for your assets. For instance, you can get customers for electronics, furniture, and jewellery fast. If you are sentimental about certain items, you may have to sacrifice them to save yourself from going bankrupt.

Cut down on some expenses

Look at your budget and consider cutting down on some of the expenses until you manage to pay off your debts. You can spend less on expenses such as cable, telephone or television costs for a while.

If you are not willing to make such sacrifices, look for ways to get additional income so that you can afford to pay off debts. For instance, you can try to earn from your hobby, or get a part-time job. Feel free to ask your employer for some extra working hours to make some overtime and budget your finances wisely.

Talk to your creditors

The people you owe can also save you from declaring bankruptcy. Talk to the creditors and be honest about your financial situation. If you admit that you are struggling to make repayments, they can help you ease the burden by reducing the interest rate or the monthly payment. Some of the credit card companies also have hardship programs to assist debtors in such situations. Before enrolling in a hardship program, ensure that the monthly payment is reduced.

Consider consumer credit counselling

According to the bankruptcy laws, every debtor should seek consumer credit counselling before filing for bankruptcy. A professional counsellor who deals with creditors can help you get your interest rates or monthly payments reduced. They can also intervene between you and the creditor to facilitate a debt management plan. With this plan, you should repay your debt within 5 years which is enough time for you to find alternative solutions to acquire the money.

Seek assistance from family or friends

Though this is not the best decision, the people close to you can sympathize with you in your financial struggle. Before approaching them, spare some time and calculate the amount of money you need to settle your debts. Consider how much you can contribute and let them chip in to help you with the difference. You also need a plan on how you will repay them to avoid straining your relationship with them.