What Can You Not Do After Filing Bankruptcies? Top 10 Mistakes to Avoid
Bankruptcy can be a financial lifeline, but only if you do it right. You’ll need to avoid certain actions post-bankruptcy for a truly fresh start. Based on the information we’ve learned after helping countless Floridians recover financially, here are the top 10 mistakes to avoid after filing bankruptcy.
1. Racking Up Debt Right After Bankruptcy
Taking on new debt immediately after filing bankruptcy can put your financial recovery in jeopardy. It’s crucial to resist the temptation to:
- Open new credit cards
- Take out loans
- Accumulate other types of debt
Instead, it’s better to prioritize living within your budget. Even applying for new debt too quickly could create an impression of being financially irresponsible to lenders – making it harder to obtain credit or loans for significant purchases (i.e., car, home, etc.) in the future.
2. Failing to Rebuild Credit
Neglecting to take steps to improve your credit score can severely limit future financial opportunities. After filing for bankruptcy – it’s essential to be laser-focused on reestablishing your credit. Here’s how:
- Apply for a secured credit card
- Consistently pay your bills on time
- Check your credit report to ensure that all settled debts are reflected correctly
3. Omitting Debts During Filing
It’s important to declare every debt during bankruptcy proceedings. Any undisclosed debts may not be wiped out and creditors might continue their collection efforts. Always include a comprehensive list of creditors and the amount you owe each. Neglecting this step could leave you liable for debts post-bankruptcy that could have been cleared.
4. Ignoring Financial Education
Post-bankruptcy education courses may seem boring, but if you pay close attention to the instructions, you’ll learn plenty of ways to improve your finances, including how to responsibly handle your money and avoid falling back into old spending habits after you’ve received a discharge.
Further, you’ll learn in-depth answers to questions like:
- Can you file bankruptcy on credit cards?
- Is it bad to file bankruptcies?
- How to avoid bankruptcies?
5. Declaring Bankruptcy to Avoid Paying Lawsuit Judgment
Filing bankruptcy as a means of dodging a lawsuit may not prove successful – particularly when it comes to debts that can’t be discharged. Certain obligations such as court-mandated payments or judgments arising from fraudulent activities may be exempt from being wiped out during bankruptcy proceedings.
It’s generally in your best interest to seek help from an experienced lawyer about alternative debt relief options before declaring bankruptcy to avoid paying lawsuit liabilities.
6. Using Credit Cards Before Bankruptcy
Racking up tons of debt on your credit cards before filing bankruptcy will garner a suspicious eye from your trustee and the judge. As such, substantial purchases made near your filing date (typically within 90 days of) may not qualify for discharge and could lead to repercussions such as having your bankruptcy case dismissed. Once you decide to pursue bankruptcy it’s advisable to refrain from using credit cards before bankruptcy.
7. Attempting to Hide Assets
Attempting to hide assets from your trustee is another activity that’ll raise suspicions of fraud. If a bankruptcy trustee learns that you’re intentionally hiding assets (i.e., offshore bank account, hidden cash, etc.), you might lose the ability to receive a discharge – And that’s not to mention potential fines and criminal charges. It’s best to always disclose your assets, even if you think they might be exempt.
8. Failing to Update Financial Information
Not keeping your bankruptcy trustee informed about changes in your financial situation could cause problems for you. During the bankruptcy process, it’s crucial to notify your trustee of any shifts in your income or expenses.
For instance, receiving an inheritance or a paycheck raise might influence your bankruptcy plan. Being open with your trustee can smoothen the bankruptcy process by preventing surprises or delays.
9. Avoiding Budgeting and Financial Planning
Failing to plan is a plan for failure – Without a proper budget and financial plan, you risk falling back into debt. After bankruptcy, it’s essential to create a budget to manage your income and expenses effectively.
This means accounting for all sources of income and listing necessary expenses, including:
- Rent
- Utilities
- Food
- Healthcare expenses
A well-structured budget can help you build an emergency fund, avoid unnecessary expenses, and prevent the financial mistakes that led to bankruptcy in the first place.
10. Bankruptcy to Avoid Foreclosure Without Exploring Alternatives
Bankruptcy to avoid foreclosure can do many things, but it’s not likely that it will stop foreclosure. Though, Chapter 7 may hold it off for slightly longer. If you’re filing Chapter 13, this time must be used to develop a repayment plan to catch up on missed mortgage payments. For these reasons (among others), it’s generally recommended that you explore all other alternative debt relief options available to you if your home is already in foreclosure.
If you’re considering bankruptcy, you don’t have to strategize alone – The Attorney Debt Fighters are here to walk you step-by-step through the bankruptcy process, including exploration of alternatives to Chapter 7 or Chapter 13. Contact us today for your free consultation with a Florida bankruptcy attorney you can trust.
FAQs
Can you file bankruptcy on credit cards?
Credit cards are a form of unsecured debt (i.e., they’re not backed by collateral). As such, they’re typically dischargeable in bankruptcy – Which means they are completely eliminated.
Is filing for bankruptcy bad?
Some see the effects of filing bankruptcy as “the end.” At Attorney Debt Fighters, we see it as a brand-new start. It will temporarily decrease your credit score, but at the same time, you’ll be free of mountains of debt. With enough time and responsible financial actions, your credit will be restored and you’ll have a fresh beginning.
How to avoid bankruptcies?
There are a few alternatives to bankruptcy that can help you recover financially. Creating a budget (and sticking to it) as well as cutting back on unnecessary expenditures are an excellent place to start. Enrolling in a financial counseling course can help you make realistic plans while understanding the core values of financial responsibility.
The most important thing to do is take consistent action. We’re here to help you recover from steep debt and chart a new path to financial freedom – Get in touch with us today for a free consultation.
