Filing for personal bankruptcy can be a way to discharge or reorganize your existing debt. In addition to getting a fresh financial start, bankruptcy may also allow time to negotiate with creditors as you may be granted an automatic stay from legal action. However, just because you filed for bankruptcy doesn’t mean you will be granted the right to do so. What are some issues to avoid if you want your petition to be successful?
Don’t Make the Court or Creditors Think You Have Cash or Assets
After filing for bankruptcy, rapper 50 Cent posted pictures on social media of himself with stacks of cash. Afterwords he claimed the cash wasn’t real in the pictures. While there may be nothing fraudulent about posing for a picture, it could make others question if you are telling the truth about your ability to repay your debts. In some cases, these questions could lead to your case being dismissed. It is also possible that a Chapter 7 case could be converted to a Chapter 13 case if it turns out you have income or other assets that can be used to repay your debts over a longer period of time.
Make Sure You Do Everything Asked of You
Prior to filing for bankruptcy, you may be required to take a credit counseling course. In addition, you may be required to attend a meeting with your creditors where they can ask any questions that they may have about your case. Other requirements may include paying filing fees and providing the court with personal and financial information. Information provided to the court may include recent tax returns, a list of all your assets as well as a complete list of your creditors and how much each is owed.
What Happens If Your Case Is Dismissed?
It is possible that your case could be dismissed. However, as long as you haven’t done anything egregious or designed to commit fraud, the case will be dismissed without prejudice. If this were to happen you can refile bankruptcy proceedings immediately and the automatic stay will still go into effect. If your case is dismissed with prejudice, creditors may attempt to make collection efforts.
If you need relief from your creditors, bankruptcy may be an option for you. However, make sure that you don’t do anything to undermine your assertion that you cannot pay your bills or need more time to pay past due amounts. The good news is that this can usually be accomplished by simply telling the truth and asking for help if you need it along the way.