The DONT’s of Bankruptcy

The DONT’s of Bankruptcy in Arcadia CA

bankruptcy lawyer ArcadiaYour conduct and behavior before and during bankruptcy can damage or even be fatal to your case. On the other hand, understanding your rights and responsibilities can minimize your risks. Consult with a bankruptcy lawyer Arcadia CA to help you navigate the pitfalls commonly encountered by those seeking bankruptcy protection.

DON’T repay loans to friends, relatives or business associates who have lent you money. Payment to an “insider” (which includes relatives, friends and business associates) within one year before you file bankruptcy is a “preference.” The trustee may require and preferential payments by returned to the bankruptcy court to be divided equally among creditors.

DON’T talk to your creditors or bankruptcy trustee directly after you have filed for bankruptcy. Allow you bankruptcy attorney to talk on your behalf and forward any mail received to your attorney.

DON’T fail to list a creditor off your petition. If you intend to pay them back, you may do so after the bankruptcy, but include them in your petition.

DON’T run up a lot of bills within 70-days before you file. If you max out your credit cards or take out a loan before you file, the court could find your petition was filed in bad faith and dismiss it, or except those debts from discharge.

DON’T withdraw or borrow from your 401k, IRA and retirement plans to pay bills. Early withdrawal of these funds makes you liable for penalties and taxes which may not be discharged in bankruptcy, and you may be able to exempt and keep all funds maintained in these accounts.

DON’T borrow money on your home to pay unsecured (i.e. credit card, utility or medical) bills. If you take out a second mortgage on your home, you may be converting debt which would have been discharged in bankruptcy into debt which you will still have to pay in order to keep your home.

DON’T put real or personal property you own into someone else’s name to avoid it being taken by creditors or the trustee. That kind of transfer is a fraud on creditors and can result in your discharge being denied. In addition, the trustee can take the property from the person to whom it was transferred.

DON’T attempt to sell your property for less than what it’s worth or to a family member.

DON’T run up your credit card debt prior to filing a bankruptcy, especially within the 70-days prior to filing. The court may view this as an attempt to exploit the bankruptcy system, and the judge may treat it accordingly.

DON’T buy any luxury or non-essential items prior to filing for bankruptcy.

 

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