Filing for Chapter 7 bankruptcy is a huge decision. Yes, when you file Chapter 7 bankruptcy, it relieves you from the debts that you owe, but the bankruptcy process isn't exactly simple. Filing bankruptcy is something that stays with you for a long time, and if you make a mistake when you file, it's often a really costly mistake. So, before you decide you're going to file, learn what type of mistakes people commonly make when filing Chapter 7 bankruptcy so you can avoid them.

Reaffirming Debts They Shouldn't

No one wants to lose their house or their car. Fortunately, when you file Chapter 7 bankruptcy, you can reaffirm the debt so that you keep your house or car. However, you also have to maintain the terms of the loan. This may not be such a good thing if you want to become financially stable. The fact is, if you can't afford it, you should let it go. You can always buy a new house or car later, when you can afford it, and you won't have all of the unnecessary stress that comes with trying to make payments you can't afford.

Filing During the Wrong Time of Year

If you want to keep you income tax refund, you need to plan your bankruptcy well. You don't want to file bankruptcy at the end of the year, because if the court knows that you're going to be receiving a large sum of money, they could rule that some or all of it be awarded to your creditors. You could also have issues if you wait until after you've spent your income tax refund to file. The court won't be pleased if you've spent a large sum of money buying things that aren't necessary when you have a lot of debt waiting to be paid. So, the best thing you can do is talk to a bankruptcy attorney before you file. This way, you'll know whether or not your income tax refund will be taken into consideration.

Not Listing All Creditors

If you don't list a creditor on your bankruptcy paperwork, that debt can't be discharged. So it's important that you list every creditor that you owe money to -- regardless of how large or small the debt. If you're considering paying specific creditors in full, you might not want to list those creditors on your bankruptcy. However, that may not be in your best interest, because if the creditor isn't listed, you're responsible for the money you owe -- even if you change your mind about paying them in the future.

Remember, filing bankruptcy is a major decision. So, once you decide that you want to file, you don't want to make any mistakes. If you aren't sure how something specific will affect your bankruptcy, talk to your bankruptcy attorney.

For an attorney, contact a law firm such as Lynn Jackson Shultz & Lebrun PC.