No doubt, filing for Chapter 13 bankruptcy can be a lifesaver when drowning in a never-ending swirl of debt. However, the process is complicated, and even a small mistake can put your financial recovery at risk. Even in severe cases, it can lead to the dismissal of your case.
That’s why understanding the common pitfalls is essential. Before filing, learn about the biggest mistakes to avoid to protect your financial future. Let’s dig in!
1. Failing to Hire a Chapter 13 Bankruptcy Lawyer
The most common mistake you can make when filing for Chapter 13 bankruptcy is to attempt it without professional guidance. Bankruptcy laws are intricate. A slight mistake can derail your case. So, hiring an experienced Chapter 13 bankruptcy lawyer is essential.
Proper guidance is crucial to understanding the legal intricacies and gathering the necessary documentation. An expert chapter 13 bankruptcy lawyer can guide you through the process to strengthen your case.
2. Filing at the Wrong Time
Filing Chapter 13 bankruptcy at the wrong time can lead to a conversation with Chapter 7 or dismissing your case. It can even result in asset liquidation and creditors resuming collection efforts. So, it’s important to understand the timing rules and potential consequences before filing for Chapter 13 bankruptcy.
3. Misrepresenting Information
Honesty is crucial when filing for Chapter 13 bankruptcy. Mispresenting your assets, income, or financial situation can have severe consequences, such as dismissing your case or even criminal charges. Ensure all debts, financial information, and assets are accurately disclosed to the court.
4. Not Sticking to Your Payment Plan
If the court has approved your Chapter 13 bankruptcy plan, it’s essential to stick to it diligently. Failure to make timely payments to the bankruptcy trustee can even result in the dismissal of your case. This will leave you in a worse financial situation than before. So, it’s essential to create a budget and prioritize your bankruptcy payments to avoid this pitfall.
5. Incurring New Debts without Court Approval
You should only incur new debts with court approval during your Chapter 13 bankruptcy. Taking on new debts can jeopardize your repayment plan. It can also raise doubts about your commitment to repaying creditors. Consult your Chapter 13 bankruptcy lawyer before making significant financial decisions during bankruptcy.
6. Skipping Mandatory Financial Education Courses
Chapter 13 Bankruptcy law requires you to complete financial education courses. Failing to attend and complete these mandatory courses can result in your case being dismissed. Ensure you complete the necessary financial educational courses to keep your bankruptcy proceedings on track.
7. Failing to Report Financial Changes to the Court
Financial situations keep changing in life. You must notify the court immediately if your expenses or income change significantly during your Chapter 13 repayment plan. It will help you avoid potential repayment plan modifications and complications.
8. Ignoring Tax Obligations
Staying current with your tax obligations is crucial during Chapter 13 bankruptcy. Don’t ignore tax obligations. Otherwise, you will have to face severe complications, including the dismissal of your case. Consult with an experienced tax professional to ensure you meet your tax responsibilities.
