Mistakes people make...
Even with the best of intentions, some things people do
BEFORE filing a bankruptcy case can be serious
mistakes and cause serious problems with the bankruptcy case. For
example:
1. Excessive use of credit cards:
Once you have made your decision to file a bankruptcy
petition, stop using your credit cards, but continue to make the minimum
monthly payment, if possible. Charges for luxury goods and services owed
to a single creditor, totaling to more than $500.00 within 90 days of filing,
are presumed nondischargeable and an abuse of the bankruptcy process.
Cash advances totaling to more than $750.00 for all creditors within 90 days of
filing are also presumed to be nondischargeable and thus may be found to be due
and owing. Don't jeopardize your "fresh start" by running up
your credit cards. The dollar amounts
change from time to time, so be sure the amount you tell me is correct.
2. Paying back family members:
Your family members may be creditors if they loaned you
money. Unfortunately, you cannot treat your family members 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 one year of filing bankruptcy, although amounts under $2,000 are
generally too small to bother with. Non-family creditors are subject to a
"look-back" of only 90 days.
3. Closing out retirement accounts:
Retirement accounts are generally fully protected from
creditors. 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.
Don't jeopardize your future retirement!
4. Transferring or conveying property (selling
or giving it away, especially to a relative):
A bankruptcy trustee can undo a transfer of property that
previously belonged to you. This can occur if the transfer was made
within four years of the filing of the bankruptcy (and sometimes longer) with
the intent to hinder, delay or defraud a creditor, or simply if a fair price
was not received.
5. Taking out a second mortgage:
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, you may be putting your house at risk, and you will be incurring more
debt that you can't afford.
6. Failing to appear in court:
Do not assume that you can avoid a lawsuit simply because
you've decided to file bankruptcy. A collection case continues until your
bankruptcy case is actually filed, which occurs only after all
the fees are paid; you have met with us and provided all the necessary
information for preparing the 40 or so pages of bankruptcy forms; you have
reviewed, signed, and returned the forms to us for filing with the Bankruptcy Court;
and you have completed the required debt counseling program (by telephone or
Internet) which we coordinate for you. Once the case is filed, we will
let the court and the collection agency know that they
are prohibited from continuing.
7. Not telling us the truth, the whole truth and
nothing but the truth:
We can't help you if we don't know what the real problem
is. Failing to tell us about your assets and debts can lead to the loss
of those assets, denial of your bankruptcy discharge, fines, imprisonment, or
any combination of the above. I know that sounds harsh, but reality is
like that sometimes! Full disclosure and complete honesty is mandatory!
The Law Office of David G. Baker is a debt relief agency
as defined by the amendments to the Bankruptcy Code that became effective on 17
October 2005.
PLEASE NOTE: Nothing on this page or this website
is intended to constitute legal advice. Your circumstances may be
different, so call me or another lawyer to discuss your particular situation
BEFORE taking any action!