The bankruptcy laws are a powerful tool that can provide debt relief and a new financial life for hard-working people. But many people take actions before filing bankruptcy which can harm their interests or even expose them to allegations of bankruptcy fraud. Before you take any actions regarding your debts or assets, you should speak with an experienced bankruptcy lawyer.
The desperation caused when finding yourself in a difficult financial situation caused by high medical bills, loss of income, or a recent divorce can consume you emotionally as well as financially. With your debts piling up, you may have come to the conclusion that your only option is filing for bankruptcy to eliminate your debts.
Be careful. There are some detrimental financial moves that can hurt your bankruptcy case and your ability to get a discharge – the fresh start you want when the bankruptcy case is over. It’s important that you avoid these mistakes so that your bankruptcy filing is a smoother process, rather than a litigated matter filled with challenges from your creditors, or the bankruptcy trustee.
Bankruptcy is a life-changing experience, but if you want it to be a positive one, it’s best to know what NOT to do before filing. Too many consumers attempt to skirt bankruptcy laws by trying to hide or give away assets that should be part of their filing.
Bankruptcy courts don’t take kindly to that. It’s the job of a bankruptcy trustee to be sure all assets are reported and accounted for and while that may take a while, it’s really hard to hide something and get away with it. The penalties for that include dismissal of your petition for bankruptcy and could include criminal charges punishable by up to $500,000 in fines and five years of jail time.
Chapter 7 bankruptcy includes a “means test,’’ a requirement that you disclose all of your assets and income, which determines your capacity to pay off creditors. If you purposely leave out assets or income, trying to help your qualification, your case could be dismissed. You could also be banned from filing on those debts ever again. Eventually, a bankruptcy trustee will have access to your financial records, so it’s unlikely your deception will go unnoticed. You shouldn’t try to hide any creditors, either, because credit-card companies have centralized and computerized information. They will all know you have filed for bankruptcy protection. Bottom line: Tell the truth.
Bankruptcy law is too complicated for the average consumer to understand. Bankruptcy attorneys know all the subtleties, which might escape uninformed people. Attorneys should know legal ways to protect assets that could be at risk. It might be tempting to save money in this do-it-yourself era, but filing bankruptcy on your own probably not worth the trouble or risk. In 2017, people representing themselves succeeded only about 5% of the time in bankruptcy filings. An attorney can help you determine which bankruptcy is best for you: Chapter 7 or Chapter 13.
This is illegal and a certain way to derail your bankruptcy efforts. You are not allowed to transfer any assets for the purpose of protecting them. People often believe that if they transfer assets, such as houses, cars and cash to relatives or others that those assets will be safe from the bankruptcy proceedings. This is simply not true, and in fact, transferring assets does little to protect your assets. Worse still is that these attempts can be construed as bankruptcy fraud by the court, even if you had no intention of concealing the assets.
Remember that just having assets doesn’t mean that you can’t file a bankruptcy. There are assets that are exempt, and based on those exemptions, you may still get to keep that property. Also, just because you file, does not mean that you will necessarily lose your assets. The reality is that most people are able to keep their personal assets when they file for bankruptcy, so hiding them is completely unnecessary.
Perhaps the first thing that you should do if you’re having financial problems that are leading to bankruptcy is to stop using your credit cards immediately. It also means not taking out any cash advances against your credit cards. These large purchases or advances can be considered an attempt to commit bankruptcy fraud if they are made within ninety (90) days of filing. You might have to pay your credit-card debt in full and creditors could accuse you of fraudulent borrowing. To be safe, once you choose to file bankruptcy, you should stop using your credit cards.
Even more than credit-card use, it’s especially irresponsible to take on new debt, especially if you tap into a home equity line. Again, the prudent course is to suspend all debt once you know bankruptcy is the step you’re going to take.
The moment you file for bankruptcy, all of your assets, including current and future payments awarded from a lawsuit, are transferred to the bankruptcy court. That means that you may not receive any of the money awarded to you, even if your legal case has not been resolved, or if the amount of the settlement hasn’t been determined.
In fact, it is a FRESH START. A new beginning, so to speak. A chance to wipe the slate clean, and start over.
Once you understand more about discharging debts in bankruptcy, you’ll likely find that using
Chapter 7 to eliminate debts you’re struggling to pay is just what you need to get a fresh financial start.
We hold your hand every step of the way, and make every effort to get you back on you feet again ASAP.
The steps you take now can affect your life in many ways for years to come. An attorney at our firm can review your situation and help you decide whether a Chapter 7 bankruptcy or a filing under Chapter13 is right for you. The Law Office of Stephen H. Swift, P.C. is knowledgeable regarding Colorado bankruptcy laws and what can and cannot be done in cases like yours.
We can handle all aspects of your bankruptcy, from start to finish. You can then start rebuilding your credit rating and finances on a more secure basis.