6 Most Common Bankruptcy Mistakes to Avoid (Pt. 2)  

August 23, 2014

Picking up from where 6 Most Common Bankruptcy Mistakes to Avoid (Pt. 1) left off, here we will continue to highlight some of the more missteps and mistakes people make when filing for bankruptcy.

More Bankruptcy Mistakes to Sidestep…

Mistake 3 – Failing to disclose all assets in the bankruptcy petition.

Failing to disclose all assets in a bankruptcy petition and not utilizing bankruptcy exemptions are common bankruptcy mistakes you should avoid making.

Failing to disclose all assets in a bankruptcy petition and not utilizing bankruptcy exemptions are common bankruptcy mistakes you should avoid making.

Once a person has figured out which type of bankruptcy is the best option for his situation, preparing the bankruptcy documents to file with the court will be the next step. As part of this process, the person will have to detail all of his assets, such as his home, vehicles, bank accounts, etc.

If people forget to disclose any of their assets or they intentionally try to hide some of their assets, they will only be creating more problems for themselves and their bankruptcy case. This is because failing to disclose assets in bankruptcy documents:

  • Can delay a case
  • Can be viewed by a bankruptcy trustee as an attempt to commit bankruptcy fraud
  • Can result in a person being denied his request to have his debts discharged (when bankruptcy fraud is suspected)
  • May even result in criminal charges being filed against a person.

To avoid such complications and potential problems, people should work with an experienced bankruptcy attorney like Jon B. Clarke to ensure that they properly and fully disclose all of their assets in their bankruptcy petition.

Mistake 4 – Not fully taking advantage of all applicable bankruptcy exemptions.

When filing for Chapter 7 bankruptcy, people will be able to protect a substantial portion of their assets from liquidation by taking advantage of the applicable Colorado bankruptcy exemptions. These exemptions can be applied to a wide range of assets (up to a maximum set value), with only some of the covered assets including people’s:

  • Homes and home furnishings
  • Motor vehicles
  • Work-related tools
  • Personal items, like clothing and jewelry
  • Insurance policies and retirement accounts

It’s important to point out here that, for some people, it may be possible to get the maximum value of the exemption raised (so that more of their assets are protected). For instance, while people filing for bankruptcy jointly can realize a doubled Colorado homestead bankruptcy exemption, people who may be elderly and/or disabled may also be able to take advantage of higher maximums for allowable bankruptcy exemptions.

Failing to maximize the allowable exemptions will end up meaning that people will end up relinquishing more of their assets than they have to.

Be sure to look for the upcoming conclusion to this blog series.

Denver, Colorado Bankruptcy Lawyers at the Law Office of Jon B. Clarke, P.C.

If you are overwhelmed by debt, contact the trusted Denver, Colorado debt relief and bankruptcy lawyers at the Law Office of Jon B. Clarke, P.C. We have been providing people with superior bankruptcy and debt relief legal services for more than 35 years.

Call us at (866) 916-3950 or email us using the contact form on this page to set up an initial consult with us today.

Categories: Bankruptcy, Bankruptcy Mistakes, Blog