Avoid These 5 Common Mistakes After a Bankruptcy

Avoid these 5 common mistakes after filing bankruptcy which includes getting back into the same financial trouble. Bankruptcy—whether it’s Chapter 7 or Chapter 13—allows people seeking financial trouble a second chance at financial fresh starts. However, people who avoid making common mistakes before filing bankruptcy such as running up their debt, paying back debt to friends and family over creditors and transferring property can still have their bankruptcy cases dismissed.

Mistake 1: Failing to Prove Credit Counseling

The U.S. Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 require people to obtain credit counseling within 180 days of filing bankruptcy. The bankruptcy case can be filed without showing proof of undergoing credit counseling. However, people, also called debtors, must provide a certificate from a debt counseling agency approved by the bankruptcy courts. Of course, there are exigent circumstances that warrant exceptions to the rule. However, many individual debtors have seen their petitions dismissed for this reason, according to the Northwest Debt Relief Law Firm.  

Mistake 2: Fail to Make Payments

Chapter 13 allows people to repay their debt over a specific amount of time. For instance, they may have 36 months to repay their outstanding mortgage monthly payments to the trustee while continuing to pay their current mortgage payments. When people are already facing foreclosure and financial instability, things can occur such as missed bankruptcy or mortgage payments. Too many consecutive missed payments can result in bankruptcy cases being dismissed and automatic stays lifted. This means people trying to save their homes from foreclosure can lose them.

Mistake 3: Fail to Attend Bankruptcy Hearings

Filing bankruptcy requires attending hearings. Typically, people must attend two Chapter 13 bankruptcy hearings or one bankruptcy hearings, before the bankruptcy is finalized, according to the Tanney Law Firm. People who decide not to show at these hearings put their bankruptcy case at risk. Thus, missing a hearing means losing the legal protection and financial freedom people are seeking.

Mistake 4: Fail to Tell Your Lawyer Everything

Full disclosure is absolutely essential for lawyers to represent people in bankruptcy cases. Thus, people must inform their lawyers of all the financial debt, any potential problems making payments and any attempts to transfer debt.

Mistake 5: Fail to Complete Required Course

Also, under the 2005 Act, people are responsible for completing an approved financial management course before they can obtain a bankruptcy discharge.