If you want to enjoy the full benefit of filing for bankruptcy, don’t make any of these mistakes! If you already have made some of these mistakes, it doesn’t mean that bankruptcy is unavailable to you; it simply may meant that we may need to work through some hurdles before you can file.
- Transferring Assets Before You File. If you file Chapter 7, the trustee in your bankruptcy may treat the transfers as fraudulent and reverse them. If that were to happen, the assets would be included in your bankruptcy and you could lose them as a result. If you transfer assets before filing Chapter 13, the total amount you must pay on your debt reorganization plan will increase.
- Running Up Your Credit Cards or Getting Cash Advances During the 90 Days Prior to the Start of Your Bankruptcy. You may end up being stuck with this debt rather than having it discharged.
- Repaying Money that You Borrowed from a Family Member, Friend or Business Associate Within One Year of Filing. If the amount that you repay to someone exceeds $600.00, the trustee is likely to treat the payment as preferential. If that were to happen and you were in Chapter 7, the trustee would probably reverse the payment and distribute the money to your creditors on a pro-rata basis. If the trustee could not recover the payment, he might use that fact to object to the discharge of your debts, which would force you to come up with the amount of the payment. If you made a preferential payment prior to filing Chapter 13, the amount of money you would have to pay on your debt reorganization plan each month would probably be increased.
- Getting a Home Equity Loan to Pay Debts Instead of Filing Bankruptcy. Your house is not an ATM machine, and you can’t borrow your way out of debt! Many people put off the inevitable by getting a home equity loan to pay off their credit cards or other debts and later, they lose their home because they cannot afford to make their home equity loan payments. If you don’t pay your credit cards, the creditors may harass you, but if you don’t pay your home equity loan, you’re at risk for losing your home. So before you get a home equity loan to pay your debts, find out how bankruptcy might help you.
- Borrowing Against Your 401(k) or Cashing in Your IRA Rather Than Filing Bankruptcy.If you use your retirement funds to keep up with your financial obligations, you will not only deplete the money you will need to pay for your retirement (money that would be safe from your creditors in your bankruptcy), but you will also owe significant taxes on those funds – taxes that you won’t be able to get rid of in bankruptcy.
- Waiting Too Long to File. It is human nature to put off doing something that is unpleasant. However, if you act soon enough when you are having serious money troubles, you can use bankruptcy to stop foreclosure, repossession, creditor lawsuits and other collection efforts.
- Filing for Bankruptcy When You Have a Substantial Tax Refund Pending. You can only protect a limited amount of cash in bankruptcy, and tax refunds are treated just like cash. In other words, if you file for bankruptcy after your tax refund arrives, that money may be at risk. Exactly how much cash you can protect and the appropriate timing of your bankruptcy are issues you should discuss with your attorney when you meet for the first time.
- Not Listing All of Your Debts on Your Schedule of Debts. One of the forms that your attorney must complete for you and file with the court is called a Schedule of Debts. It is very important that every debt you owe is listed on this form, even if you have a co-debtor/co-signer on a debt or if you intend to repay a particular debt. If you forget to tell your attorney about a certain debt, it may not be discharged in your bankruptcy.
- Missing the Court Hearing in Your Bankruptcy. If you do not attend the hearing (also known as the 341 Meeting of Creditors or Creditors Meeting), your case may be dismissed.
Let Me Advise You
If you are suffering from severe financial issues, then you need representation on your side. It is vital for you to be well educated regarding your debt relief options. As a skilled San Antonio bankruptcy attorney with more than 14 years of experience, I can provide you with the information and answers that you need in your case.
Contact my firm today to schedule your free initial consultation.