Filing for bankruptcy can be a huge relief. The automatic stay protects you from collections activities, and you get a break from stressing out about debt and how to get all your bills paid every month. The creditors finally stop calling. You can keep your utilities on.
The one thing that can wreck your calm in this moment is making mistakes on your bankruptcy filing. If your petition is rejected or you don’t receive a discharge, the automatic stay protection goes away, you are still stuck with your debt situation, and you are out the money you paid to begin the bankruptcy process. In order to get the most out of your bankruptcy filing, you should do it once and do it right. Here’s how to avoid the five most common bankruptcy mistakes.
- Filing the wrong chapter. In 2005, the bankruptcy code changed to make it harder to file for Chapter 7, or total bankruptcy. Now, you have to be able to pass the Means Test to prove that you do not have enough disposable income left over each month to make payments on your debt. If you file the wrong chapter, your case will be dismissed and it’s back to square one.
- Not completing your counseling requirements. In order to be eligible for a discharge in Chapters 7 or 13 bankruptcy, you must complete Debtor Eduction and Credit Counseling. These courses are not expensive, inconvenient or time consuming. They usually cost $25.00 to $35.00–and you can even get that cost waived if you qualify—take about an hour, and you can participate online, in person or over the phone. However, if you decide to skip this simple step, you are not eligible for discharge.
- Not using your exemptions properly. Some states have their own exemptions, some make use of federal exemptions, and some let you choose from a state or federal system. You can certainly use your exemptions poorly and still get a discharge, but if you use them wrong, you won’t get a discharge at all. For example, in Washington State, you have to elect to use State Or Federal Exemption, but once you choose, you have to use that system for every category. You can’t mix and match. An attorney can evaluate your assets against the different exemptions and advise you how to best protect your non-exempt assets.
- Not attending the meeting of the creditors. You aren’t going to the firing squad. For most 341 Meetins, the creditors do actually attend, so there’s no reason to be nervous or dread this meeting. Just go. If you don’t, it’s an automatic dismissal of your filing.
- Not including all your assets or debts. It’s your trustee’s job to make sure everyone in your case is following the rules. If you don’t, you could have your case dismissed, or even face fines and jail time for fraud. In bankruptcy, you’re not only obligated to list all the debts, you have to list everything. If there’s a debt you want to continue to pay, you’ll have a chance to say that. Certainly do not omit assets, and even money you believe you have coming your way, such as trusts or inheritances. Failure to do so has big consequences.
Over the past 32 years, the Law Offices of Christopher A. Benson has helped over 2,300 of Washington clients take control of their financial situation. We can stop your garnishment and change your monthly payments for all your combined unsecured debt, and if you have had more than $600 garnished within the last 90 days, we can get all of the money back in most cases. But you have to act quickly–call (253) 815-6940 for your free consultation, or email us today. Evening and weekend appointments available.
