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10 big bankruptcy blunders for 2006

If you're headed into bankruptcy in 2006 you're already in a bit of a mess. The worst thing you can do now is to compound your problems. Of course there are many tried and true ways to do just that, but if you've decided the bankruptcy is the best solution to your problems, avoid committing one of these blunders:

1. Failing to disclose previous bankruptcy. This has a way of coming back to bite you especially because it's so easy for the court to discover all the details of your previous filing.

2. Miscalculating income and expenses. Be as specific as possible when going through your expenses with your attorney. The system works best when petitioners answer all questions honestly and play the bankruptcy game by the rules.

3. Failing to disclose an asset. Some people think, "I don't want to lose my car so I better not say anything about it." Instead, they should be thinking, "I don't want to lose my car so I better tell my attorney about it because my attorney will know best how to protect it." They should also be thinking, "If I don't want my bankruptcy petition refused, I probably shouldn't lie to my attorney or to the court." Make sure that your attorney knows about ALL your assets.

4. Attempting to use a paralegal. While there are many fine paralegals, it is not their job to give sound legal advice. Under the new bankruptcy laws if you have valuable assets, you need an attorney.

5. Failing to submit documents in timely manner. Do not bring attention to your case because you fail to adhere to the trustee requests -- get requested documents to the court immediately.

6. Missing your hearing. If you miss your hearing, you might get a judgment against you, and certainly the court will be far less disposed toward you in the future.

7. Trying to hide assets. Do not transfer a car or house out of your name and then file bankruptcy. The likelihood is that you will lose the asset and get the new owner in trouble. Hiding assets tends to expose them.

8. Advancing cash to yourself. Cash advances at least three months before you file are even more likely to bring creditor challenges to your bankruptcy.

9. Abusing credit cards. Heavy use of your cards three months before you file carries a "presumption of abuse." You will likely end up returning some or all of the money from these charges.

10. Lying. In general, honesty is the best policy. But if you're asked by your spouse, "Do I look fat in these jeans?" do what you think is best.

Justin Harelik is a practicing bankruptcy lawyer in the Los Angeles office of Price Law Group. To ask a question of the Bankruptcy Adviser go to the "Ask the Experts" page, and select "bankruptcy" as the topic.

Bankrate experts' advice
Repeating your money errors of the past is a sure way to personal finance wreck and ruin.
Here, Bankrate columnists identify their picks as the worst mistakes you can make when it comes to your finances in the areas of real estate, debt, taxes, bankruptcy and personal finance, along with tips on how to avoid them next year.
Thrifty 60
1. 10 big bankruptcy blunders
2.10 missteps that will plunge you into debt
3. 10 real-estate wreckers
4.10 terrible tax mistakes
5. 10 top money errors
6. 10 miscues when dealing with debt collectors



Bankrate.com's corrections policy -- Posted: Dec. 20, 2005
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