Most people don't see the point of hiring a bankruptcy lawyer. Besides, hiring a bankruptcy lawyer will only be an extra expense on their already strained finances.
However, filing for bankruptcy is not as easy as most people assume. Quite often, people attempting to handle bankruptcy cases make costly mistakes. Hiring a bankruptcy lawyer ensures you don't make costly mistakes when filing for bankruptcy.
Hence, despite the extra strain on your finances, hiring a bankruptcy lawyer can help you avoid the following mistakes.
1. Committing Fraud
The court places a hold on all your assets when you file for bankruptcy. The hold prevents asset transactions that may interfere with the ongoing bankruptcy case. Furthermore, the court will use the assets to clear your debts when the bankruptcy case finalizes.
People often try to hide some of their assets from a bankruptcy case by transferring ownership to friends or relatives. Be aware that the law deems such actions fraudulent since you will be shortchanging your creditors by hiding some of your assets.
You could thus face fraud charges if the court discovers you hid some of your assets before or during a bankruptcy hearing. You will also lose the assets you were trying to hide.
Thus, it is vital to hire a bankruptcy lawyer so that they can help you avoid such actions that damage your bankruptcy case.
2. Paying Some Creditors Before Others
Filing for bankruptcy helps you avoid harassment from your creditors. The creditors can't harass you because they must wait for the court to rule on your bankruptcy case. Furthermore, they will only receive the money you owe them after the court finalizes your bankruptcy case.
However, if you attempt to pay some of your creditors while your bankruptcy case is ongoing, you will damage your case. When bankruptcy trustees learn of such actions, they often initiate a clawback lawsuit. A clawback lawsuit aims to recover any money or assets paid out to creditors without the explicit consent of the court.
As a layman, you may not know about such prohibited actions. Thus, hiring a bankruptcy lawyer ensures you don't damage your case by taking such actions.
3. Making Unusual Transactions
After filing for bankruptcy, you might be eligible for a debt discharge. But you can lose the debt discharge eligibility by making suspicious transactions such as booking an expensive holiday or buying expensive jewelry.
If a creditor realizes you are making such transactions, they can object to the debt discharge. As a result, the court can rule out a debt discharge and force you to pay all your debts.
However, a bankruptcy lawyer can guide you on the appropriate transactions you can make during a bankruptcy case. Hiring a bankruptcy lawyer ensures you don't damage your debt discharge eligibility.