5 Expensive Bankruptcy Mistakes to Avoid


Filing for bankruptcy is often the last option after all else has failed. To get to this point, you have most likely undergone severe financial stress that you simply cannot bear anymore. If indeed you have run out of options and are looking for a way out, it is time to make that trip to a bankruptcy attorney. The good news is that you can, and will, overcome bankruptcy.

Before filing for bankruptcy, you need to be certain you understand the process. Unfortunately, many people do not understand how a bankruptcy process looks like. Invariably, they make mistakes that jeopardize their success. Below are some of the most critical bankruptcy mistakes you should avoid.

1. Hiring a Lawyer with Scant Bankruptcy Experience

You start at a disadvantage if you hire an attorney without sufficient experience in handling bankruptcy cases. To avoid having your bankruptcy case thrown out, hire a bankruptcy attorney with extensive experience in handling bankruptcy cases. As a rule of thumb, choose an attorney who has handled a large number of bankruptcy cases successfully.

2. Choosing an Attorney with Too Many Bankruptcy Cases

There is a lot of paperwork in bankruptcy cases. It takes time to fill these forms. If an attorney is handling too many bankruptcy cases at the same time, you are likely to receive a poor service. If a client has too many clients, getting through to them on phone or receiving prompt replies to your emails can be a huge challenge.

3. File for Bankruptcy on Your Own

If you do not have assets, you can try to file for bankruptcy on your own. However, this is not recommended since it carries many risks. If you go down this route, you get to take calls from creditors and handle all inquiries on debt reaffirmation. You will also have to appear at your bankruptcy hearing by yourself and respond to questions fielded by creditors during the hearing. Having a lawyer to represent you acts as a buffer between you and your creditors. However, if you have assets such as a car, house, bank accounts, retirement accounts, filing for bankruptcy by yourself is a bad idea.

4. Hiring an Incompetent Attorney

Any competent bankruptcy lawyer should first advice you to explore alternatives to bankruptcy. Although you are within your constitutional rights to file for bankruptcy, doing so should be the last option. Your attorney should explain to you the disadvantages of filing for bankruptcy.

5. Failure to Embark Immediately on a Thorough Credit Report Rehabilitation Program

Filing for bankruptcy is the first step towards your total financial rehabilitation. You will have to discharge your debts and find ways of stopping creditor calls. Beyond this, you need to come up with a cash flow management plan and a savings account and embark on a credit score recovery journey. A credible law firm that also cares about you should guide on how to rehabilitate your dented credit score.

As you embark on your credit score recovery, be aware of fraudsters who make unreasonable promises such as their ability to rid your credit report of bankruptcy, lawsuits and foreclosure reports. Following their advice could land you in even murkier waters.

By the time you decide to file for bankruptcy, you have probably run out of alternate options. You should make sure the bankruptcy attorney representing you has the requisite experience in handling bankruptcy cases successfully. Once your bankruptcy case is complete, embark on a process of discharging most of your debts while at the same time starting a credit rating rehabilitation journey with a view to improving your credit score. Besides, you need to start creating reserves and gradually start climbing out of the bankruptcy rabbit hole.