1. THE CREDIT CARD RUN-UP MISTAKE:
Stop using your credit cards once you have made the decision to file bankruptcy. Credit card charges in excess of $500.00 made within 90 days of filing bankruptcy are presumed to be non-dischargeable which means that you will still owe these debts. Cash advances of more than $750.00 within 70 days of filing are also presumed to be non-dischargeable. Don’t jeopardize your “fresh start” by continuing to use your credit cards.
2. THE REPAY A FAMILY MEMBER MISTAKE:
Let’s say that you owe Mom and Dad or Grandma some money and you also owe the credit card companies a good bit of money and you’ve made the decision to file bankruptcy. However, you have some money that you could use to pay some of your debts. So you decide to pay back your relatives. That’s completely understandable. I mean who wouldn’t choose to pay back family over the credit card companies? However, the bankruptcy laws require you to treat family members just like any other creditor. No special favors are allowed for relatives. If you do pay back a family member within one year of filing bankruptcy, the Trustee assigned to your case can make your relatives cough up the money.
3. THE TRANSFER PROPERTY OUT OF YOUR NAME MISTAKE:
Some people think they can protect property that would otherwise be taken away from them in bankruptcy by just giving it away or selling it real cheap to a relative or close friend. Then after the bankruptcy is over, they’ll get their property back. This particular type of scheming is known as a fraudulent conveyance in bankruptcy, And a bankruptcy trustee has the power to undo a transfer of this kind going back four years before the date you filed bankruptcy.
4. THE LIQUIDATE YOUR RETIREMENT ACCOUNT MISTAKE:
Many good people raid their retirement accounts in an attempt to pay off their debt. Unfortunately, many times these people continue to have debt problems and end up filing bankruptcy. Only now they no longer have their retirement accounts for their golden years. Had they just filed bankrupcy to begin with, they would still have their nest egg as retirement accounts are generally protected in bankruptcy. You can eliminate your debt and still keep whatever you have in an ERISA qualified retirement account.
5. THE LINE OF CREDIT/SECOND MORTGAGE TO PAY DEBT MISTAKE:
The same logic regarding retirement accounts also applies to the equity you have built up in your home. Don’t take ouit a second mortgage or a home equity line of credit (HELOC) in order to pay off unsecured debt. If you do, you’re not really getting out of debt, you’re just moving the debt around. Yes you may have paid off your credit cards but the debt is still there and now your house is at risk. You’ve gone and turned general unsecured debt into debt secured by your home. And if something bad happens and you’re unable to pay this new debt, you could very likely end up losing your home. Not a smart move but well-intentioned people do it every day.
6. THE FAILURE TO APPEAR AT COURT MISTAKE:
If a creditor or bill collector sues you and you either must file a written response or appear at a court hearing, make sure you do what you are supposed to do. Otherwise, the person who sued you will win by default and then they can do things like garnish your paycheck or file liens on your property. Of course filing bankruptcy will stop all of this collection activity, but the bankrutpcy must be filed prior to your deadline for answering the lawsuit or your court hearing. Collection activity and lawsuits don’t stop just because you decide to file bankruptcy. You must actually get your bankruptcy case filed before you’ll be protected from collection activity.
7. THE FAILURE TO TELL YOUR ATTORNEY THE TRUTH, THE WHOLE TRUTH AND NOTHING BUT THE TRUTH MISTAKE:
If you want your lawyer to be able to really protect you and your property from your creditors and bill collectors, you must tell your lawyer everything there is to know about your financial situation. This includes being truthful and not holding back regarding everything you own. If you fudge the facts and aren’t completely open and honest with you lawyer, it’s impossible for your lawyer to represent you effectively. And the end result is that you could very likely lose the stuff you were trying to protect. Or worse yet , you could lose your stuff and have your bankruptcy case dismissed and be sanctioned with monetary fines and imprisonment. The penalties for fraud and dishonesty in bankruptcy are quiet severe these days.
If you’re struggling with debt problems and would like to know more about how bankruptcy may be able to help you, contact me today to schedule a FREE initial consultation. Just fill out the Contact Dan form on the far right side of the page and click the Submit button and I’ll get back with you as quickly as I can. I would count it a privilege to be able to visit with you in a relaxed and confidential environment where I’ll answer all of your questions in plain English and give you the straight scoop on the pros and cons of bankruptcy as related to your specific situation.
Source: Kansas Bankruptcy Law Information.
