The actions an individual takes leading up to filing bankruptcy can drastically affect their ability to get a “fresh start,” which is the primary goal of filing for bankruptcy. By avoiding the following bankruptcy mistakes, filing for bankruptcy can be a successful process without any bumps in the road.
- The Use of Credit Cards Before Filing: Don’t use your credit cards once you have made your decision to file bankruptcy. Charges for luxury goods and services owed to a single creditor, totaling more than $500.00 within 90 days of filing, are presumed nondischargeable and may be due and owing to that creditor. Cash advances totaling more than $750.00 for all creditors within 70 days of filing are also presumed nondischargeable and may be found due and owing. Don’t jeopardize your “fresh start” by running up your credit cards.
- Repaying a Family Member or Friend Prior to Filing: You cannot treat your family member or friend any different than you would a creditor with regard to repaying debts. A bankruptcy trustee may get that money back that you repaid to a family member or friend within one year of filing bankruptcy.
- Getting Money Out of a 401K To Repay Creditors Before Filing: Retirement accounts are generally protected. You can discharge your debt and generally keep whatever you have in a retirement account, free and clear. Many individuals drain their retirement accounts in an effort to pay down credit card debt and will usually incur tax liability in doing so, a debt that is nondischargable debt!
- Transferring Property For Less Than Its Value Before Filing: A bankruptcy trustee can undo a transfer of property that previously belonged to you. This can occur if the transfer was made within six years of the filing of the bankruptcy with the intent to hinder, delay, or defraud a creditor, or if you did not receive the fair market value of the property.
- Borrow From a Second Mortgage to Pay Off Credit Card Debt Prior to Filing: Don’t take a loan against your real estate in an effort to reduce the equity. You can often file bankruptcy and not lose this valuable asset. If you take out a second mortgage to pay credit card debt or to reduce the equity in your house, you may be putting your house at risk.
- Failing to Appear in Court or For Any Court-Ordered Hearing: Do not assume that you can avoid a lawsuit simply because you’ve decided to file for bankruptcy. A collection case continues until your bankruptcy case is actually filed, which occurs only after the fees are paid, you have met with us and provided all the necessary information for preparing the 40-plus pages of bankruptcy forms, you have reviewed and signed the forms for filing with the Bankruptcy Court, and you have completed the required debt counseling program (by Internet, which we coordinate for you).
- Failing To Tell Your Attorney The Truth, The Whole Truth and Nothing But The Truth: An attorney can only provide advice based upon information provided by the client. Failure to notify your attorney about your assets or your debts can lead to the loss of those assets, denial of your bankruptcy case, fines, imprisonment or all of the above.
Observing these do’s and don’ts will help set you up to make the most of your right to debt relief under the Bankruptcy Code. For dependable advice about your own situation or particular debts, contact us at Woodruff Law offices at our convenient Marietta, Georgia location.
Playing games with the bankruptcy system is dangerous. At Woodruff Law offices, our attorneys fully understand how the bankruptcy laws apply to your particular situation and will keep you away from any of these pitfalls.
We are a debt relief agency. We help people file for bankruptcy relief under the Federal Bankruptcy Code.