Four Mistakes That Can Derail Your Bankruptcy
If you are in dire financial straits and are considering filing for bankruptcy, certain actions can hurt your bankruptcy case, even if done innocently. Even if you are planning on filing bankruptcy several months in the future, it is important to speak with a lawyer and avoid doing something that could derail your debt relief plans.
At Roderick Linton Belfance, LLP, our attorneys have extensive experience handling bankruptcy law matters for people in Akron, Medina and throughout Northeastern Ohio. We can help you make sure you avoid the following bankruptcy mistakes:
Things You Shouldnt Do Before Filing For Bankruptcy
Oct 3, 2017 | BANKRUPTCY
On behalf of Law Offices of Patrick L. Cordero, PA posted in Bankruptcy on Monday, August 1, 2016.
You may have seen our earlier post on 4 things to do before filing for bankruptcy. On the flipside are things a person should not do before filing for bankruptcy. What you do or dont do before filing can have a great impact on whether your filing achieves your desired goals.
Lets take a look at some of the things to avoid before filing for bankruptcy:
1. Dont use a credit card to buy that fur coat.
Or any other luxury item, for that matter. Under the so-called presumption of fraud doctrine, luxury goods and services that are purchased with a credit card within 90 days of filing bankruptcy and cost more than $675 are presumed to be fraudulent, and thus not dischargeable in a Chapter 7 bankruptcy.
The rationale behind the presumption is that consumers who make such luxurious purchases right before filing for bankruptcy had no intention of repaying the debt. So, they should pay the debt rather than discharge it.
2. Dont take out large cash advances.
Similar to the presumption of fraud doctrine mentioned above, if you withdraw more than $950 within 70 days of filing for bankruptcy, the new debt is presumed to not be dischargeable. The $950 amount is cumulative over the 70 day period and can be met by combining one or more cash advances.
3. Dont neglect to file your income tax returns.
4. Dont hide or transfer assets.
Pay Off Favored Creditors Before Filing Bankruptcy
As a Baltimore County Bankruptcy Lawyer, I see this a lot. They will have a certain creditor that they feel has been good to them, or with whom theyve had a long relationship. In order to satisfy this one creditor, they will take out additional credit with other banks to pay down this one in the hopes that they can keep it after bankruptcy.
Let me just start with this premise. If you know or have a strong inclination that you will be filing bankruptcy and you use your credit cards, youre committing fraud. If you know you cannot repay a debt and incur it anyway, thats stealing. So the saying Robbing Peter to pay Paul is quite appropriate. In the bankruptcy context, you can find yourself with a discharge denied to you for these accounts. If youve done this in anticipation of filing bankruptcy, talk to your lawyer.
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Dealing With Your Vehicle
One of the forms you will file with the bankruptcy court is called the Statement of Intention. In this form, you tell the court what you plan to do with property that is securing a debt you owe, like real estate or a vehicle.
If you own your vehicle but are still paying on the loan, you have a few options on how to deal with it in Chapter 7 bankruptcy.
You can reaffirm the debt, keep your vehicle, and continue making payments. This means the debt will not be discharged and you will continue making monthly payments during and after bankruptcy. If you miss future payments the lender will have the right to repossess the vehicle and possibly try to collect on any deficiency between the balance you owe and the amount they get when selling the vehicle.
If you select this option in your Statement of Intention, your car lender will send you a reaffirmation agreement for you to complete and return. In some bankruptcy cases a reaffirmation hearing will be scheduled.
If you choose to surrender your vehicle, then it will be repossessed and the debt will be discharged in your bankruptcy. Filers with high car payments they can’t afford often choose to surrender their car to get out of the debt.
Your Trustee May Sell Your Assets
You are able to keep:
- ordinary household goods
- tools up to a set amount used to earn an income and
- vehicle with a value up to a set amount.
Your trustee can sell other assets including your house and property. You must not dispose of any property belonging to the trustee. You must declare any assets you have when you apply for bankruptcy and any you receive during bankruptcy.
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Discover The Benefits Of Filing For Bankruptcy
When you are seeking bankruptcy protection, our firm represents individuals and small business owners who want to file Chapters 7 and13 bankruptcy cases. We can help you navigate through the more complex filings of debt reorganization through Chapter 11 bankruptcy and with Chapter 12 bankruptcy for family farmers.
You might also be able to retain your assets even if you file for bankruptcy. If you are ready to file for bankruptcy protection and to start eliminating crippling debt, contact the team members at Farmer & Morris Law, PLLC by calling today.
What Happens After Filing For Bankruptcy In 2021
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In a Nutshell
Knowing what happens after you file bankruptcy can make it seem less intimidating. Read on to learn about filing Chapter 7 bankruptcy, the meeting of creditors, keeping your car, and why creditors must stop contacting you after filing.
Knowing what happens after you file bankruptcy can make it seem less scary. Read on to learn about filing Chapter 7 bankruptcy, the meeting of creditors, keeping your car, and why creditors must stop contacting you after filing.
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Honesty And Accuracy Are Paramount
It is important to mention that you need to provide accurate and honest information regarding your bankruptcy. There are penalties for perjury. You are required to provide accurate information about debt, assets, expenses, income and financial history.
Perjury penalties include either a $250,000 fine or 20 years in jail. And if you provide incomplete information on your bankruptcy paperwork, the court just made dismiss your case. And if you forget to list an asset, a trustee of the court can seize that asset.
This is why it is extremely important to provide complete information on your bankruptcy paperwork. Be sure not to leave anything out. The FBI investigates all bankruptcy crimes.
Understand The Advantages Of Filing For Bankruptcy
You may have wondered, what is the downside of filing for bankruptcy? There are some advantages to filing for bankruptcy, too, however. When you need a fresh start to get out from under a heavy debt load, filing for bankruptcy could be just the answer you need. In addition to a new start, federal bankruptcy offers consumers, business owners, and corporations many benefits, including the following:
- Complete relief of all dischargeable debts with no further obligation to repay them.
- The ability to hold on to some personal property and assets like your home and vehicle.
- Relief from the constant pressure and invasive contact from debt collectors.
- Over time, your credit score can improve when discharged debts are removed from your .
Your wages cannot be garnished by your creditors and your car cannot be repossessed while you are going through the bankruptcy process. Your lawyer can explain other advantages to filing bankruptcy that apply to your specific situation. Bankruptcy can give you the opportunity to create a new financial picture for yourself, your family, or your business.
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Avoid Filing Bankruptcy If You’ll Receive Future Payments
Funds that are not actually in your possession but which you expect to get in the future are part of your bankruptcy estate. If you are filing for Chapter 7 bankruptcy, the Chapter 7 trustee can take this money and use it to repay your unsecured creditors. Examples include agreeing to accept a future bonus at work, getting an inheritance you’ll receive in the future, or filing tax returns that entitle you to a refund. If you anticipate receiving any payments or money in the future, talk to a bankruptcy attorney.
Heres Why You Need A Bankruptcy Attorney:
Hiring a Bankruptcy Petition Preparer is NOT a Solution
Pro se filers often hire a BPP as a cheap alternative to a lawyer in an attempt to save money. The BPP may tell you all you need to do is pay them just $75.00 and it will be easy to waive the Bankruptcy Courts $335.00 filing fee. This is often not the case and can eventually result in a dismissal of your case. A BPP cant provide legal advice when a waiver is denied or when other problems arise.
Let there be no doubta bankruptcy petition preparer is nothing more than a typist who, by law, isnt even allowed to give you legal advice. It isnt worth your time or money. Learn more about the risks and responsibilities of filing bankruptcy in Wisconsin without a lawyer, or book your free consultation with our Milwaukee area bankruptcy attorney today.
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Think Carefully Before You Take Actions That Can Result In Future Payments
Funds that are not really in your possession, but you expect to get in the future, are part of the bankruptcy estate. As long as you are filing for Chapter seven bankruptcy, the bankruptcy trustee can take this money and utilize it to repay your unsecured creditors. Examples include accepting an inheritance that will be paid in the future, agreeing to accept a future bonus at work, or filing tax returns that entitle you to a refund. If you are expecting to get any payments or money in the future, talk to a bankruptcy lawyer.
The choice to file for bankruptcy can be hard however, for most people who get to this point, they have no other choice. Luckily you can start over again without being stigmatized from going into bankruptcy.
How Much Cash Can You Keep When Filing Chapter 7
The answer to this question depends on what exemptions youâre able to claim. If you are not in an opt-out state, chances are the cash you have on you is covered by the 13,900federal wildcard exemption. If youâre not using federal bankruptcy exemptions, youâll want to check your state exemptions.
Important: Some exemptions protect money in a bank account but not actual cash.
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What Can I Spend Money On Before Filing Chapter 7
Think necessities. First, any money going toward your regular monthly living expenses should be fine, so you can make sure to pay all of those bills before filing your Chapter 7. Be careful about pre-paying any bills, though, as that may not be allowed.
Depending on how much money you have to spend down, heading to Costco to stock up on toilet paper and non-perishables may be all you need. It can also mean getting your kids a new set of clothes for the upcoming school year, stocking up on other household supplies, or getting furniture.
If you have a large amount of money to spend, it may make sense to purchase a car. This is an easy filing expense to justify if youâre surrendering your current car in your Chapter 7 or Chapter 13 bankruptcy. Just make sure the car you purchase is protected by an exemption.
If You Need To Borrow Money
If you are looking into filing for bankruptcy at a time when you may need to borrow money, banks will most likely be hesitant to work with you while you are under the protection of the bankruptcy court.
While it is possible to borrow money during a bankruptcy, the court will generally limit the amount borrowed in situations where they are absolutely necessary.
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Your Assets Should Stay Put
Keep your assets put before filing bankruptcy and do not try to move them. Avoid the temptation of trying to sell your assets or to hide assets before filing for bankruptcy. Again, you could risk being able to get a discharge, and you also risk incurring criminal penalties. Just dont do it. It is not worth the risk, but if you have sold property prior to filing a bankruptcy to pay for food, shelter and clothing, that is acceptable. Just be prepared to provide the proper documents to support this. In this case, there is no wrongdoing on your part.
Whenever you file for a bankruptcy, you must always be honest and transparent about everything. Your creditors and the court have the legal right to know everything.
Don’t Drain Your Retirement Account
You can protect most retirement funds in bankruptcy. Therefore, one of the most unfortunate financial mistakes that people regularly make before filing for bankruptcy is withdrawing retirement funds to pay off a debt that bankruptcy could wipe out.
Before paying off bills in this manner, speak with a knowledgeable bankruptcy attorney. You’ll likely find yourself in a much better financial situation if you file for bankruptcy before depleting your nest egg.
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Get In Touch With Our Bankruptcy Team Today
If you are wondering whether it is the right time to file bankruptcy, the experienced team at Resnik Hayes Moradi LLP is capable of reviewing your case to put you on the path to financial freedom.
If you looking for more information about how we can help you file for bankruptcy, contact us through our website or give us a call at 344-0043 today!
Best Practices While Spending Down Money Before Filing Bankruptcy
Anything you do in the weeks or days leading up to your bankruptcy filing may be reviewed by the trustee. Their job is to make sure youâre not trying to âget awayâ with something thatâs not allowed. Here are a few things you can do to prepare for dealing with your trustee on this.
Update your list of assets. Whatever you buy before filing is an asset of your bankruptcy estate and needs to be listed on your Schedule A/B.
Keep receipts. That way, you can show the trustee what you purchased. This is especially important if youâre spending more than $50 in any given store.
Avoid withdrawing cash. Use your debit card instead. If you withdraw large amounts of cash before filing bankruptcy be prepared to have receipts for every single dollar you spent. Otherwise, itâll be hard to prove to the trustee that you donât still have the cash.
Donât buy gift cards. Theyâre basically the same as cash.
Be reasonable. This is not about buying fancy things. This is about making sure you spend the money on things you need. Your purchases should be in line with your regular monthly income.
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What Not To Do Before Declaring Bankruptcy
Reading time: 9 minutes
Bankruptcy allows you to wipe out your debt and start fresh. The process can stop legal actions against you, and it will also prevent your creditors from harassing you for repayment.
However, bankruptcy is a legal process, and your conduct before filing will be under review. There are some things that you should never do before filing for bankruptcy. Some of these mistakes may be considered offences under the Bankruptcy & Insolvency Act and can jeopardize your ability to obtain your bankruptcy discharge. Others are just not a good idea financially.
At the same time, if you are considering bankruptcy as an option to help you get out of debt, there are specific steps you can take before declaring bankruptcy that can make the bankruptcy process run smoother. In the second half of this article, Ill provide some tips on what you should do before filing.
If You’re Considering Personal Bankruptcy Here Is How The Process Works
If your debts have become unmanageable or you’re facing foreclosure on your home, you might be thinking about declaring bankruptcy. While bankruptcy may be the only way out for some people, it also has serious consequences that are worth considering before you make any decisions. For example, bankruptcy will remain on your credit report for either seven or 10 years, depending on the type of bankruptcy. That can make it difficult to obtain a credit card, car loan, or mortgage in the future. It could also mean higher insurance rates and even affect your ability to get a job or rent an apartment. This article explains how bankruptcy works and also offers some alternatives to bankruptcy.
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