The actions an individual takes leading up to filing bankruptcy can drastically affect his or her ability to get a “fresh start”. By avoiding these seven mistakes, one can travel successfully through the bankruptcy process without losing a pound of flesh.
Don’t use your credit cards once you have made your decision to file bankruptcy. Changes for luxury goods and services owed to a single creditor, totaling to more than $700 within 90 days of filing, are presumed non-dischargeable and may be found to be due and owing even after bankruptcy. Cash advances totaling to more than $1,000 for all creditors within 70 days of filing are also presumed nondischargeable and may be found to be due and owing even after bankruptcy. Don’t jeopardize your “fresh start” by running up your credit cards.
You cannot treat your family member any better than you would an ordinary creditor with regard to repaying debts. In fact, a bankruptcy trustee can reclaim any amount repaid to a family member within two (2) years of filing bankruptcy, although their may be exceptions depending on the terms of the loan and repayment.
Retirement accounts are generally protected. You can eliminate your debt and usually keep whatever you have in a retirement account, free and clear. Many individuals drain their retirement accounts in a futile attempt to pay down credit card debt before bankruptcy. Bankruptcy should be considered first.
A bankruptcy trustee can undo a transfer of property that previously belonged to you. This can occur if the transfer was made within two (2) years of the filing of the bankruptcy with the intent to hinder, delay or defraud a creditor, or simply if a fair price was not received.
Don’t take a loan against your real estate in an effort to reduce the equity. You can often file bankruptcy and not lose your home. If you take out a second mortgage to pay credit card debt, you may be putting your house at risk.
Do not assume that you can avoid a lawsuit simply because you’ve decided to file bankruptcy.
A collection case continues until your bankruptcy case is actually filed, which occurs only after all the fees are paid, you have met with us and provided all the necessary information, you have reviewed, signed the forms for filing with the Bankruptcy Court, and you have completed the required debt counseling program
An attorney can only provide advice based upon information provided by the client. Failure to notify your attorney about all of your assets can lead to the loss of those assets, denial of your bankruptcy case, fines, and even imprisonment or all of the above if you intentionally misrepresent yourself in your bankruptcy petition. Tell your attorney everything and honestly.