Bankruptcy Mistakes to Avoid
The actions an individual takes leading up to filing bankruptcy can drastically affect your ability to get the benefit of the "fresh start" from bankruptcy. By avoiding these mistakes, one can successfully complete the bankruptcy process and start anew.
THE CREDIT CARD MISUSE MISTAKE:
Once you have started to think about bankruptcy you should avoid using your credit cards especially for non-essential items, pleasure, entertainment or to "treat" yourself including "Retail Therapy". Don't use your credit cards for any reason once you have made your decision to file bankruptcy or have consulted an attorney for possible bankruptcy.
Changes for luxury goods and services owed to a single creditor, totaling 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 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 or using them for non-essential items.
THE REPAY A FAMILY MEMBER MISTAKE:
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.
THE LIQUIDATE YOUR RETIREMENT ACCOUNT MISTAKE:
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.
THE TRANSFER PROPERTY OUT OF YOUR NAME MISTAKE:
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.
THE LINE OF CREDIT/SECOND MORTGAGE TO PAY DEBT MISTAKE:
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.
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. 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.
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