While considering what to write about next on the topic of personal insolvency, I started thinking about conversations I have had with potential customers or customers. Each client’s situation is unique but it seems that common issues keep arising. Below are common bankruptcy mistakes:
1. The credit card run-up sin:
When Congress was considering what debts shouldn’t be permitted to be discharged, so they place this issue at the front of the line (really it had been second in line to a certain type of taxes)! Consumer debts that are incurred for luxury goods or services over $550.00 within 90 days before filing a bankruptcy petition are assumed to be nondischargeable. Additionally, if you obtain cash advances in an amount over $825.00 over 70 days before filing bankruptcy the debt incurred will be assumed to be nondischargeable.
There was a good reason Congress created the law what it is now. Think about the term equity. Can you think it is fair for someone to come for you to borrow money when they had no intention of ever paying you back? That is just what would happen if Congress allowed individuals to discharge debt that they incurred on the eve of filing bankruptcy. I don’t personally have some sympathy for the credit card companies but at the same time, I am a proponent of laws being passed to prevent individuals from blatant theft. Any good bankruptcy attorney would recommend that you stop using your credit cards even when you’re currently thinking about filing bankruptcy. Odds are if you are reading. There are ways to resolve this problem if it has already occurred. Call for Chapter 7 Bankruptcy Attorneys here.
2. The refund a family member sin:
This is your bottom line – when it comes to repaying debts, you cannot treat a relative better than you would any other lender. An important point to know about this sin is that the bankruptcy trustee can go to the relative and create the relative turn over to the trustee any amount you repaid the family member within one year of filing bankruptcy.
3. The property from your name sin:
Following the client figures out that they can exempt only one car, the client has an epiphany and decides to move all but one car from their name. Normally, they get a friend or even a relative to take the title. They intend to transfer it back in their name and don’t get any cash for the automobile. I truly should charge some sort of additional fee to clients that choose to make this mistake since it is such a kick in the gut when I have to stop everything from your case to assist them to reverse what they have done. The bankruptcy trustee is involved by one consequence taking the home undoing the move of the property, liquidating the home, and using the money. The harsher consequence involves the United States Trustee filing a complaint. It’s never good when a division of the United States Department of Justice files a federal lawsuit against somebody. The principle to remember with this particular sin is that it is illegal to transfer land with the intent to hinder, delay, or defraud a creditor. By the way, don’t think for a moment that each scheme imaginable has not been attempted. There are several lawful and easy ways to deal with bankruptcy estate planning. Talk to an experienced bankruptcy lawyer before doing something you might regret.
4. The liquidate/borrow against your retirement accounts in:
This sin doesn’t get you thrown in prison but is still a definite kick in the gut. Under just about every situation, your retirement account is usually protected and cannot be taken from you in bankruptcy. Before cashing accounts you have worked so difficultly for and that you have planned on applying for retirement, think about filing for bankruptcy. It tears at my soul to see those who have nothing left after years of cashing/borrowing from retirement plans. Seek help before slipping from yourself.
5. The line of mortgage
This sin is like the sin above. Normally, your homestead can not be taken from you and is protected. Do not borrow to cover charge cards. All this will do is increase your monthly payment and reduce your equity. Your home is an investment that you ought to look at in the long run. Do not blow it on a short-term fix that may not solve the problem. Also, it can put your house at risk in the long run. Once more, bankruptcy can frequently file and not lose this valuable asset.
6. The failure to appear at court proceedings sin:
A number of my customers found themselves being prosecuted until they filed for bankruptcy. Sometimes a person does the trick that is ostrich and sticks their head in the sand. Not facing litigation can cause more issues than coping with it. Issues can include the garnishment of wages that could be embarrassing and difficult. Further issues can include discovering that all the money in your bank account has been levied or”frozen.” This can cause payments to electric to rebound and cause you considerable overdraft issues, and the creditors that you want to cover the mortgage, such as your lease.
The largest issue surrounding lawsuits may involve exactly what the judgment itself signifies to your home. In fundamental terms, decisions become liens on the property. This implies that in case you own your house and have a judgment against you, your home has a lien on it. This lien may be removed or prevented but it’s an added thing that may be a substantial problem when you move to sell your home and takes some time. If you are uncomfortable dealing with the creditor or their attorney, have a bankruptcy attorney do it.
Another point to make is that even if you decide you’ll be filing bankruptcy, then you aren’t fully protected until the case is filed and set activity can last. Until the bankruptcy case is filed, a set case can continue.
7. The failure to inform your lawyer the Entire truth, the fact, and nothing but the truth are:
Bankruptcy lawyers do not have crystal balls and are consequently not able to see into the souls of mankind. In any area of the law, your attorney can provide advice that is based upon information provided by you. Attempting to disclose assets, debts, transfers, income, or anything else relevant to your situation may cause a loss of assets or denial. We do our best once we fulfill our customers to reach the base of the issues and my customers do not lie. Though, the consequences could be severe when it does occur. Intentionally lying can result in not just the loss of resources but may cause a denial of imprisonment, fines, your bankruptcy case, or each the aforementioned.
The most appropriate course of action to avoid the seven deadly sins of insolvency is to look for legal advice concerning your debt and your rights before doing anything. If you’ve taken activities that you feel may cause difficulties as mentioned previously you should talk to an attorney to determine the best course of action.