When entering any kind of business, you should be ready for the possibility of going bankrupt. No investment is completely certain, especially opening a startup business. No matter how successful you think you can be, there’s still a chance that your business may fail. If that happens, an option you have is filing for bankruptcy. Here are some of the most common mistakes people make:
Providing Inadequate or Dishonest Information
The bankruptcy paperwork requires you to provide certain information about yourself and your business. This includes all your assets, income, expenses, debts, and complete financial history. If you knowledgeably misrepresented yourself by presenting incomplete or inaccurate information, you may be subject to criminal prosecution. If you fail to disclose something, it may haunt you in the middle of the bankruptcy filing process.
Choosing Which Loans to Repay
Paying back loans from friends, relatives, or certain creditors may be seen as a preferential transfer, which is not good when you’re filing for bankruptcy. The trustee may start an adversarial proceeding to get the payment you’ve made from the person or creditor and then equally disburse it among all your creditors. You might drag the person or creditor with a new case if you repay loans selectively.
Not Working with a Lawyer
Bankruptcy can be a pretty complicated process and not working with a lawyer can do you more harm than good. The Baim Law Firm says that there are many bankruptcy lawyers in Arkansas you can choose from depending on your budget and preferences. It’s important to have the guidance of someone who has experience in handling bankruptcy cases for you to succeed in filing it and getting help from the debt you’re in.
Never do these common mistakes to be more careful throughout the entire bankruptcy filing process. Never do anything unless you’re completely sure that it wouldn’t hurt your case.