Bankruptcy can offer debtors a fresh start. It can allow budgets to work again and for debtors to regain a sense of calm in their lives. We want our clients’ cases and experience with the bankruptcy court to go as smoothly as possible.
Here are some examples of what people who are considering filing for bankruptcy or have filed should remember:
Do not feel bad about considering bankruptcy as an option — sometimes life just happens. Often you are able to function better after the stress of debt is lifted from the household. You can become a fully contributing consumer again. You can begin to actually put money into a savings account and not withdraw the funds a week later. Bankruptcy is a legal option for debtors to start over and the option is there for a reason, sometimes people need help.
Do not continue to use your credit cards if planning to file for bankruptcy in the near future. Credit card purchases for luxury goods or services exceeding $675 to one creditor within 90 days of filing are presumed nondischargeable. This could lead to charges that survive the bankruptcy. The credit card company will need to file a motion to raise the issue with the court.
Do not take out cash advances from credit cards. Cash advances exceeding $950 within 70 days of filing a bankruptcy case may result in a non-dischargeable debt. These debts can survive the bankruptcy even if the cash advance was used for necessities. The creditor will need to file a motion to raise the issue with the court.
Do not pay off a creditor immediately before filing your bankruptcy, unless you have cleared it with your bankruptcy attorney in advance. This includes payments to friends and family. A payment over $600 to a relative, friend, or business associate within a year before filing your bankruptcy case can create a preference. A payment over $600 to an unsecured creditor within 90 days before filing your bankruptcy case can create a preference. The trustee assigned to your case may go to the friend, family member, or creditor and demand the payments are returned to your bankruptcy estate.
Do not ignore requests for documents from the Trustee appointed to your bankruptcy case; the trustee can have your discharge denied for lack of cooperation. It is also very important not to ignore requests for documents or information from your attorney as they prepare your case. Our office wants every case we file to be the best prepared case and that means we need our clients to cooperate with us. We do not want any surprises.
Do not sell, transfer, or give away any of your property prior to or during your bankruptcy without first discussing it with your bankruptcy attorney. You will be required to report any transfers of property that occurred two years before your case was filed. Transfers can include items that were sold or given away. Some transfers are perfectly acceptable that is why it is important to discuss all transfers with your attorney before filing your case.
Do not forget to list ALL of your creditors, their collection agents or attorneys. People who are not listed will not receive notice from the bankruptcy court and will continue contacting you. If you are considering filing for bankruptcy, begin to keep all the billing statements and collection letters you receive.
Do not hide any information from your bankruptcy attorney or the Trustee appointed to your bankruptcy case. This applies to debts to family members or friends and payments made to these “insiders” in the time prior to filing bankruptcy. You must disclose all your assets. Bankruptcy fraud is investigated by the FBI; however, if you are honest and forthright with disclosing information to your attorney and trustee you will not have any worries.
Do not borrow or withdraw funds from retirement accounts such as 401k, IRAs, or other accounts to pay-off debt until you speak with a bankruptcy lawyer to determine if bankruptcy is necessary. It is always heartbreaking when someone comes into our office after they have wiped out their retirement and it still was not enough to stay out of our office. Retirement accounts are exempt, meaning they are safe, keep those funds for when you retire.
Do not refinance your home, take out a home equity loan, or reverse mortgage until you speak with a bankruptcy attorney to determine if bankruptcy will still be necessary. We do not want you to take out debt in an attempt to get out of debt. Burdening your exempt and most valuable asset is probably not the answer.
Do not incur any debt in anticipation of filing for bankruptcy. If you know you are going to file bankruptcy, then you should stop using credit cards, taking out payday loans, or other loans. Do not rack up debt in anticipation of filing for bankruptcy.
Do not hesitate to gain knowledge, contact us today for your bankruptcy consultation. Knowledge is power. You will not know if bankruptcy is your best option until you speak with a knowledgeable attorney about your specific situation.