Chapter 7 bankruptcy offers an opportunity for people in severe debt to begin rebuilding their credit and their financial future. But not everyone is eligible for this type of bankruptcy. If you previously filed for bankruptcy or if you have too many non-exempt assets, you may not qualify. But one of the biggest reasons people do not qualify is their own failure to comply with basic requirements. Below are ten ways to seriously sabotage yourself when filing Chapter 7 bankruptcy in Florida.
1) Omitting key pieces of information on financial forms
The path to successfully preparing for bankruptcy begins with proper completion of your financial forms. Failure or refusal to include all relevant financial information on your bankruptcy paperwork can give the image that you are a dishonest person, which may ultimately result in dismissal of your bankruptcy case and possible criminal fraud charges. When completing your paperwork, make sure you are always honest about the amount of money you earn and the debts that you owe.
2) Skipping your 341 hearing
Also known as the bankruptcy meeting of creditors, a 341 hearing is a requirement outlined in Section 341 of the Bankruptcy Code. The meeting typically lasts less than 30 minutes and involves meeting with the trustee in your case. Your creditors may also attend, though their attendance is usually not required and they often do not appear. If you fail to attend this meeting, or if you show up late or unprepared, your case could be dismissed.
3) Refusing to complete required credit counseling
In order to qualify for Chapter 7 bankruptcy, you must show that you completed credit counseling during the six-month period prior to filing your bankruptcy. In most cases, credit counseling consists of a series of brief online courses. Failure to complete these courses prior to your official filing may result in your case being thrown out by the judge. You can avoid this pitfall by completing all required coursework and keeping multiple copies of your completion certificate on hand.
4) Attempting to secure new credit
Chapter 7 bankruptcy relief is based on the premise that you unintentionally accumulated debt. So the last thing you want to do is to consciously ran up debt in the weeks prior to your bankruptcy. So if you are pursuing bankruptcy, you should follow two simple guidelines:
- Refrain from applying for new credit cards or lines of credit
- Stop using your existing credit cards
5) Repay family and friends before your bankruptcy
While you were struggling with your debts, you may have borrowed money from family or friends. And it is natural to want to repay them. But if you repay a creditor during the weeks leading up to your bankruptcy, your gesture could be treated as a preferential payment. The best thing to do if you owe money to family and friends is to wait until after your bankruptcy to repay them.
6) Continue to make payments on your debts
Creditors can put an immense amount of pressure on you in an effort to squeeze money out of you. And you might be tempted to make a small payment just to stop your phone from ringing. But making even a small payment can jeopardize yourself when filing Chapter 7 bankruptcy in Florida. It is vital that you cease payments on all of your debts, even as companies continue to press you for money.
7) File at the wrong time
Timing is one of the most important aspects of a bankruptcy filing. If you file too soon, you may miss out on relief for certain income tax debts. And if you file too late and you fail to qualify, you will be legally blocked from filing again within the next 8-year period. Because the timing of your filing is such a critical issue, it is always best to seek the expertise of a trusted bankruptcy attorney.
8) Transfer an asset to a friend or loved one
Many people worry that they will lose an asset such as a second vehicle. In an effort to hang on to their possessions, they transfer the asset to a friend or family member. This is one of the worst mistakes you can make, as the gesture could be interpreted as attempted fraud. As you prepare for the bankruptcy process, resist the urge to transfer an asset – even if it is one of your most beloved possessions.
9) Try to pay off an asset referenced in your bankruptcy
Another mistake some people make is to try to pay off a debt for an item that they love. But this is strategy can backfire by impacting your total expenses and eliminating your eligibility for Chapter 7. Make sure you resist the urge to pay off an asset – even if you can hardly bear the thought of living without it.
10) Go on a spending spree
In anticipation of having a fresh financial start, some people will start to overspend. There is sometimes a limit placed on the amount of money you can spend prior to a bankruptcy filing, so making a large number of purchases in the weeks prior to your bankruptcy may negatively impact your bankruptcy proceedings. Make sure you carefully adhere to any spending limitations and limit your purchases to essentials you can easily justify.
Need help filing Chapter 7 Bankruptcy in Florida?
As outlined above, there are many ways to sabotage yourself when filing Chapter 7 bankruptcy in Florida. It is up to you to make sure that you avoid making any of the mistakes referenced above. The single best way to ensure that you refrain from making these errors is to seek the services of an expert in Florida bankruptcy law. An experienced bankruptcy attorney will provide the guidance you need to ensure that your Chapter 7 bankruptcy is as smooth as possible.
As Florida’s most trusted team of bankruptcy specialists, Florida Law Advisers, P.A. will provide you with the legal direction you need to navigate through the Chapter 7 bankruptcy filing process. We invite you to contact us to find out how we can help you fulfill the obligations necessary to qualify for Chapter 7 bankruptcy so you can experience life after discharging debt. We look forward to helping you enjoy life after bankruptcy!