Filing for bankruptcy is never an easy undertaking, but for those struggling to meet their financial obligations, it may be a necessary one. Unfortunately, because many people are unfamiliar with the details of Chapter 13, the procedures for filing, and the expectations of the courts, mistakes may occur along the way. Some of the most common mistakes can actually prove costly to the settlement of your bankruptcy case. Here are a few things that you should know to help you avoid some common Chapter 13 bankruptcy mistakes.  

Don't Put Off The Credit Counseling

It's tempting to hold off on credit counseling, especially if you struggle with financial concepts and are worried that it may be difficult. Unfortunately, if your state requires credit counseling as part of a Chapter 13 bankruptcy, delaying that process may cost you your bankruptcy. You need that completion certificate as soon as possible for your case to move forward.

Do Not Pay Anyone Unless You Are Paying Everyone

If you have some cash on hand, you might be tempted to pay your parents or your sibling who loaned you money for something. Unfortunately, since the court will assess your spending, this may appear as showing favoritism to a creditor. Behaviors like this can lead to the dismissal of your bankruptcy filing. It's best not to pay anyone if you suspect that you are going to be filing for bankruptcy and cannot afford to pay all of your creditors.

Avoid Transferring Any Assets

If you have decided that it's time to file for Chapter 13, you might worry about losing assets that could be liquidated for the process. If you transfer any assets to a child, sibling, or friend before you file for bankruptcy, the court may dismiss your filing. This is a violation of the good faith required to handle your bankruptcy case and may be construed as an attempt to defraud the courts of the actual assets that you own.

Make Sure You Notify Every Creditor

When you fill out that bankruptcy form, notify every creditor of the process. This ensures that they cease collections and enforcement action and direct communications to your attorney. Failure to notify a creditor of the process may leave you fielding collections calls that you do not need to deal with.

These are just a few of the most common mistakes made during a Chapter 13 bankruptcy filing. Consider these tips and talk with an attorney today for more information.

Contact a local bankruptcy lawyer, such as Ricardo B. Casas, to learn more.