If you’re like most people, bankruptcy is the absolute last option you want to take if you’re in financial turmoil. You’re tired of the harassing phone calls, you can’t bear to read another letter “attempting to collect a debt,” and you’re overall just tired of the financial stress of trying to keep your head above water. If you feel this type of stress, you’re not alone in the matter.
According to a survey by the American Psychological Association, 72% of Americans reported feeling financially stressed about money… and understandably so, especially during these hard economic times.
Since the emergence of COVID-19, the deadly virus has been compared to the Great Depression with the spread of a horrifying disease and an economic downturn leaving people all over the world in financial ruins. The hardest hit in the US is the southern states, with Mississippi being one of the states suffering the most.
Everything from housing insecurity to lack of food has Mississippi residents increasing their debt by taking out loans and maxing out their credit cards, leaving bankruptcy to be their only saving grace... Mississippi may be one of the states hardest hit by financial hardships during the pandemic, but everyone has struggled one way or another and have turned to some unfavorable methods to relieve their debt before filing bankruptcy.
If you are someone suffering financially due to the pandemic from job loss, medical bills, or a decrease in income, filing bankruptcy can easily be your solution to get pandemic relief and be free from the harassing phone calls and threats of wage garnishment. But, before you file, there are some common acts people tend to do that can completely ruin their chances of being able to file bankruptcy. Make sure you’re not committing these unlawful mistakes.
Spending Large Amounts of Credit Before Filing
Just because you know you’re going to file bankruptcy, that’s not an excuse for you to go on a shopping spree as a “last hoorah” before being “financially shackled” to a bankruptcy. People have been known to max out their credit cards and take out large loans right before filing thinking that those charges can be listed in their bankruptcy with all their other debts… big mistake.
If you incur more debt, a creditor can object to discharge that debt because it’s so recent. Not only that, taking out loans and getting credit cards can be viewed as a criminal act of fraud because you had no intention to pay those debts back. That’s a totally new level of financial trouble you’ll be in, not to mention legal trouble as well, and your chances at bankruptcy will likely be terminated too.
Not Listing All Your Assets
Bankruptcy is meant to help you get out of as much debt as possible and that’s going to require the debtor to be honest about all their debts as well as seizable assets. During the process, you’re going to be filling out and signing several bankruptcy documents that you’ll be filing with the court so any misinformation or deliberately failing to disclose any assets will eventually catch up to you as your bankruptcy case goes on. It will not only cause your case to be delayed or dismissed but can also cause the asset you’ve been trying to hide the whole time to get seized.
As soon as you know you’re in over your head in debt, the best course of action is to go on and get a consultation with a bankruptcy attorney. If you’ve suffered from job loss, don’t put off filing until you’ve acquired a new job... The longer you wait to file, the larger your debt will become. Also, consulting with a bankruptcy attorney first will aid in helping you know which chapter will be best for you to file under.
Bankruptcy can be avoided with careful financial management, of course, but people make mistakes, knowingly and unknowingly; At the same time, unforeseen circumstances, like the COVID-19 pandemic, can happen and leave you in financial ruins, depleting you of all your life’s savings.
In most cases, people don’t want to have to file bankruptcy because it becomes a public record and greatly impacts your credit score. But in that same token, it’s your way to starting a new financial journey and you’ll come out of it much wiser about your money and your spending habits. Just be sure that before you file, you’re not committing any of these common bankruptcy mistakes.