Common Mistakes People Make in Anticipation of Bankruptcy
The American bankruptcy laws were put in place to help people get a fresh start. They’re not an easy way out, but require courage and commitment to improving your financial situation. They can provide the relief you need, but you need to be careful that you take the right steps to get the most out of a bankruptcy filing. Here are some common mistakes to avoid:
Don’t Draw on Your Retirement Funds to Pay Off Creditors
As a general rule, retirement accounts are exempt from your bankruptcy estate. If you qualify for Chapter 7, you’ll be able to permanently discharge many of your debts without jeopardizing your retirement. Before you think about pulling funds out of a retirement plan to pay a creditor, talk to an experienced bankruptcy lawyer.
Minimize Any New Debt You Incur
Don’t think that you can simply run up debt and discharge it in bankruptcy. If you make purchases for anything other than the necessities of life (food, clothing, utilities) within a certain period of time before you file for bankruptcy protection, those expenses may not be dischargeable. You could even be charged with bankruptcy fraud.
Don’t Try to Hide or Temporarily Transfer Property
If you own personal or real property that would otherwise be part of the bankruptcy estate, you may only transfer it in an “arms-length” transaction and the proceeds may still be a part of the bankruptcy estate. Don’t “give” valuable assets to family or friends with the understanding that you’ll get them back when the bankruptcy proceeding is over. Any transfer must typically be in exchange for fair market value or it may be considered bankruptcy fraud.
Don’t Give Priority to Specific Creditors
Under the bankruptcy laws, any “preferential” payments made within a certain period of your filing will typically have to be returned to the bankruptcy estate. Don’t pay off the personal loan you got from grandma. The bankruptcy trustee may file an adversary proceeding against her to get it back.
Contact an Experienced Rockwall, TX Bankruptcy Attorney
You can convert a Chapter 13 bankruptcy filing to a Chapter 7 liquidationAt the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filingsin Kaufman County, Rockwall County, Collin County, Dallas County, Hunt County and the surrounding counties.
