“The actions you take leading up to bankruptcy can drastically affect your journey through the bankruptcy process,” says Bert Briones, Principal Attorney of Red Hill Law Group, PC, an Irvine, CA bankruptcy/personal finance attorney. “You definitely want to pay attention to these eight potential trouble spots.”
The Credit Card Runup Mistake:
The best thing to do is to not use your credit cards once you have decided to file for bankruptcy. Consumer debts that you incur for luxury goods and services owed to a single creditor in excess of $500 within 90 days of filing are presumed to be nondischargeable and may be found to be due and owing! Even cash advances of more than $750 within 70 days of filing are presumed to be nondischargeable and may also be found to be due and owing.
The Repay a Family Member Mistake:
When it comes to repaying debts, you cannot treat a family member any better than you would an ordinary creditor. As a matter of fact, a bankruptcy trustee can reclaim any amount repaid to a family member within one year of filing.
The Transfer Property out of Your Name Mistake:
A bankruptcy trustee can go so far as to undo a transfer of property that previously belonged to you. This surprising event can occur if the transfer took place within four years of the filing with the intent to hinder, delay, or defraud a creditor.
The “Short Sell” Your Home Mistake:
When financial pressure begins to mount many people consider reducing their expenses. While this is a sound thinking on one level, it does not take into account the means testing under the bankruptcy code. I have seen many people contact our office after having sold their home under a short sale only to find out that their new rent obligation will not help them to either qualify under a liquidation or help them to reduce their payments to unsecured creditors under a reorganization.
The Liquidate Your Retirement Account Mistake:
Your retirement accounts are generally protected. You can eliminate your debt and keep whatever you have in an ERISA qualified account, free and clear. Too many individuals empty their retirement accounts in a desperate attempt to pay down their credit card debt.
The Line of Credit/Second Mortgage to Pay Off Debt Mistake:
Don’t take a loan against your real estate in an attempt 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, you may be putting your home at risk.
The Failure to Appear at Court Proceedings Mistake:
If there is a collection case pending against you in state or federal court, don’t assume that you can avoid the court process simply because you have decided to file bankruptcy. Until your bankruptcy case is actually filed, a collection case can continue.
The Failure to Tell Your Attorney the Truth, the Whole Truth, and Nothing but the Truth Mistake:
Your attorney can only provide advice that is based upon information provided by you. 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.
Please call Red Hill Law Group, PC with any questions or to schedule a no-charge face-to-face or phone consultation with an experienced personal finance/bankruptcy attorney. We can be reached at 877-343-3289, or please use our contact form and you will be contacted within the next business day.
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