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What to avoid before deciding to file for bankruptcy

On Behalf of | Jan 5, 2023 | Bankruptcy |

These days, dealing with financial stress just seems normal for many people in Michigan. Living under crippling financial stress will typically make a person do whatever it takes to relieve this constant pressure. Chapter 7 bankruptcy is an option for some people who feel like they can never pay off their consumer debt. Here are a few things that should be avoided before filing for bankruptcy. 

Do not rush into it 

Since Chapter 7 bankruptcy can wipe out a lot of consumer debt, it may be tempting to file as quickly as possible. But keep in mind a person can only receive a Chapter 7 bankruptcy discharge once every eight years, so it is not something to rush into. Unforeseen events could happen during the waiting period, such as an unexpected illness, which could make a financial situation worse. 

Do not withdraw retirement funds 

One mistake that people often make before filing for bankruptcy is draining their retirement accounts and using the money to pay debt that the bankruptcy may eliminate. In a bankruptcy, most retirement funds can be protected. It is best to avoid tapping into retirement funds before filing for bankruptcy. 

Do not give inaccurate or dishonest information 

When a person files for bankruptcy, he or she is required to provide accurate information about income, assets, debt, expenses and other parts of the filer’s financial history. Purposely giving wrong information, like failing to disclose an asset, could cause the person filing to face steep fines and even up to 20 years in prison. Before filing for bankruptcy in Michigan, it is helpful to meet with an experienced legal professional for guidance. An attorney knowledgeable in bankruptcy law can help individuals decide their best path forward. 

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