Top 4 Mistakes People Commit When Filing Bankruptcy in Arizona
Bankruptcy filing can get complicated because you have several options and each one comes with its specifics. To avoid the confusion, it’s best to consult an experienced bankruptcy attorney before getting started with the process. Otherwise, you risk committing one of the several common mistakes people commit when filing bankruptcy in Arizona.
Property and Asset Transfers Prior to Filing
This is a major mistake and an action that an attorney will advise you against.
Many people think that transferring property and assets to loved ones before the bankruptcy is a good option for keeping these instead of having them used for repayments. Depending on the price of the asset and the time of the transfer, however, such activities could be considered fraud.
If you have to sell something before the bankruptcy, make sure that you are getting fair market value for it.
In addition, check the Arizona bankruptcy exemptions. These are the properties, personal belongings and assets you will get to keep. Chances are that many of your beloved and valuable assets will fall in that category, which will render the transfer obsolete.
Waiting too Long to File
When is the right time to file bankruptcy? That’s a difficult question and there’s simply no universal answer. It’s possible, however, to postpone the process too much.
As soon as you feel that your financial problems are becoming impossible to cope with, you will need to speak to a bankruptcy attorney. There are different types of bankruptcies in Arizona and each one may be used to address a specific financial situation.
Even if you don’t qualify for Chapter 7 bankruptcy yet because of your income, you may still file Chapter 13 bankruptcy. This one doesn’t lead to debt discharge but it can minimize the payments you’re making and help you experience some financial stability.
Getting a New Credit Card or Spending a Large Sum of Money before Filing
Understand the fact that your financial behavior will be examined carefully. There could be several red flags in your history that will eventually disqualify you from a debt discharge opportunity.
Getting a new credit card immediately before filing for bankruptcy and spending large sums of money on non-essential items could both lead to problems.
Credit card debt is generally dischargeable in a Chapter 7 Arizona bankruptcy. For such a discharge to occur, however, you shouldn’t have spent money on luxury items in the final months leading to the bankruptcy. The same applies to getting a large cash advance. Such irresponsible behavior could jeopardize the entire filing process.
Filing Unnecessarily and Filing the Wrong Type of Bankruptcy
Some people wait too long before filing bankruptcy. Others jump the gun or they choose the wrong bankruptcy chapter. Both of these mistakes are common when people attempt to complete the process on their own and without relying on an attorney.
A number of factors have to be examined to determine whether bankruptcy filing is in your best interest. Some of the most typical considerations include your income, the amount of debt you’ve accumulated, the amount of property you own and any other personal circumstances (for example, suffering a disability and becoming unemployed).
Bankruptcy isn’t just about debt, it’s about an income to debt ratio. If you find yourself incapable of repaying the debt with the amount of disposable income you have, bankruptcy may be the right option for you.
Even if bankruptcy is justified, you will still have to choose the correct chapter.
Chapter 7 bankruptcies can discharge a lot of debt but they’re more difficult to qualify for. A Chapter 13 bankruptcy necessitates some debt repayment but it’s still a pretty attractive option. The negative consequences of bankruptcy have to be examined alongside the advantages to help you make a long-term decision. That will help you maintain your financial stability, without making mistakes people commit when filing bankruptcy.