The things you do in the days, weeks and months before filing for bankruptcy can affect impact your case, prevent your bankruptcy from being successful.
By avoiding these seven mistakes, you can increase your chances of successfully completing your bankruptcy case with a minimum amount of headache and hassle.
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1. THE CREDIT CARD RUN UP MISTAKE:
Don’t use your credit cards after you have made your decision to file bankruptcy. Charges for luxury goods and services owed to a single creditor, totaling to more than $500.00 within 90 days of filing, are presumed nondischargeable and may be found to be due and owing. Cash advances totaling to more than $750.00 for all creditors within 70 days of filing are also presumed nondischargeable and may be found to be due and owing. Don’t jeopardize your “fresh start” by running up your credit cards.
2. THE REPAY A FAMILY MEMBER OR FRIEND MISTAKE:
You cannot treat your family member or a friend any better than you would an ordinary creditor with regard to repaying debts. In fact, a bankruptcy trustee can sue that person to recover a payment made within one year of filing bankruptcy and redistribute the money to the poor, innocent credit card companies pro rata (although amounts under $2,000 are generally too small to bother with).
3. THE LIQUIDATE YOUR RETIREMENT ACCOUNT MISTAKE:
OUCH!! That money is for your retirement, not your credit cards. Do you want to live on the streets when you’re too old to work?!!
Qualified retirement accounts are protected. You can eliminate your debt and keep whatever you have in a qualified retirement account, free and clear. Many individuals drain their retirement accounts in a futile attempt to pay down credit card debt. NO. DO NOT DO THIS.
4. THE HOME EQUITY LINE OF CREDIT/SECOND MORTGAGE TO PAY DEBT MISTAKE:
This can be as harmful as paying from retirement funds. Do not take a loan against your real estate in an effort to pay credit cards. You can often file bankruptcy and not lose this valuable asset. If you take out a second mortgage or a home equity line of credit to pay credit card debt, you are putting your house at risk.
5. THE TRANSFER PROPERTY OUT OF YOUR NAME MISTAKE:
A bankruptcy trustee can undo a transfer of any asset that previously belonged to you, sell it, and distribute the money to your creditors. This can occur if the transfer was made within four years of the filing of the bankruptcy with the intent to hinder, delay or defraud a creditor, or simply if you did not get a fair price for the transfer. It’s called a “fraudulent transfer” because it puts assets outside the reach of your creditors, even if you did not have a bad intent. If done within one year of a bankruptcy filing, you could be denied all bankruptcy protections from your debt in addition to the trustee’s recovery.
6. THE FAILURE TO APPEAR AT COURT PROCEEDINGS MISTAKE:
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 for preparing the 40+ pages of bankruptcy forms, you have reviewed and signed the forms, and you have completed the required debt counseling program (by telephone or Internet) which we coordinate for you.
7. THE FAILURE TO TELL YOUR ATTORNEY THE TRUTH, THE WHOLE TRUTH AND NOTHING BUT THE TRUTH MISTAKE:
An attorney can only provide advice based upon information provided by the client. Garbage in, garbage out, as they say. Failure to notify your attorney about your assets can lead to the loss of those assets, denial of your bankruptcy case, fines, imprisonment, or all of the above.
Sometimes I joke that maybe you’d be better off that way. You’d get three meals a day, an hour of exercise every week (how much exercise do you get now?), and a friendly roommate named Bubba.
But it’s not a joke. Please. Do not hold back information. Every bankruptcy case gets scrutinized by a trustee at a face-to-face meeting, who is backed up by the U.S. Department of Justice. I can advise and handle just about everything you tell me about. I cannot give advice on what I don’t know.
DON’T MAKE ONE OF THESE BANKRUPTCY MISTAKES! When you’re ready to talk with an experienced lawyer who can guide you through the land mines of bankruptcy, send me an email or just call me.
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