Things You Mustn't Do - Or Easy Ways to Turn Your Bankruptcy Case into a Train Wreck
Your best thinking got you into a financial hole. Read and heed this list of things that some people do to get themselves into a deeper abyss when they file for bankruptcy.
Don't give anything away - Or It's Not Always Better to Give Than to Receive.
People sometimes think they can shelter property by giving it to friends or relatives. This is real dumb! Transfers for insufficient consideration, including gifts, sales for $1, and so on, are considered fraudulent to creditors. Your trustee will be on the lookout for them, and, if they're big enough, can undo (avoid) them by taking the property back from the recipient. This is one way trustees make their money. The look-back period for unwinding fraudulent transfers is up to four years. It's not clear on whether you can make it not happen by taking back the property either. If you do something like this within a year of filing under Chapter 7, you can be denied a discharge. A denial of discharge is just about the worst thing (other than going to federal prison) that can happen in Bankruptcy Court. It's the equivalent of the Bankruptcy Court's death sentence.
Don't pay debts to family members - What's Wrong with Paying Mom.
People sometimes pay family debts shortly before bankruptcy because they think that's the way to make sure the debts get repaid. Unfortunately, the exact opposite will often happen. If you repay a debt to an insider (someone related to you in the third degree or less, or maybe even a close friend), within the year preceding your bankruptcy filing, the trustee can get the money back from the payee. So, instead of your relative getting the money, your creditors get it. And your relative has probably already spent the money and will have a hard time paying the trustee back.
Don't deed your house to your kids -
This is a variation on don't give anything away. People sometimes deed their house to their children and reserve a life estate for themselves. That would be a fraudulent transfer if it happened within four years of filing bankruptcy, and the trustee would be able to obtain title from the children. Your life estate would still be good, but your children will lose their remainder interest.
Don't pay down your mortgage or other secured debt -
You Should Have Thought of This Earlier. If you have some cash lying around (most people don't, but you may be the exception), don't use it to make extra payments or pay ahead on secured debts, like your home or your car. That may be evidence of bad faith and can result in your case being dismissed. Moreover, having secured debt can sometimes be a good thing when going through bankruptcy. Remember the means test? Secured debt payments are often one of the juiciest deductions you can take on the test.
Don't file again within a year.
So-called serial filers lose the benefits of the automatic stay. If you have been a debtor in any kind of bankruptcy case within the past year, and it was dismissed for any reason, be sure to talk to a qualified bankruptcy attorney before filing a new case. On the other hand, if your old case was dismissed because you lost your job, and now you got a new one, a judge should understand.
Don't use your charge cards - Goodbye Plastic!
If you put something on a charge card and you've got bankruptcy in the back of your mind, that's probably fraud. Don't do it. Bankruptcy is not for crooks.
Lee Ringler is a debt relief agency proudly designated by the US Congress and the President of the United States. Lee has been helping people find solutions to their debt problems, including, where appropriate, getting out of debt under the federal bankruptcy laws for over 20 years in both Georgia and South Carolina. We work under Title 11 of the United States Code to assist you in dealing with your debt. Our office is located at 808 Greene Street, Suite 200, Augusta, GA 30901. This site is intended for marketing material only and is not a substitute for the advice of competent counsel before undertaking any legal course of action. No attorney-client relationship is formed by the viewing of this site, or the request or receipt of any information by means of it.
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