5 Mistakes to Avoid Before You File BankruptcyPosted by marinalouis on March 26th, 2020 There are many mistakes for consumers to avoid before filing bankruptcy. The following list is what I consider some of the top mistakes to avoid before filing bankruptcy. 1. Not Being Honest With Your Attorney: Disclose everything to your attorney; it is absolutely imperative that you are honest with your attorney. It does not pay to conceal anything, as such concealments can be dishonest or even illegal. Remember you are signing your bankruptcy under penalty of perjury. It does not pay to hide information from your bankruptcy attorney, and be dishonest in your bankruptcy. 2. Transfers Before You File Bankruptcy: This is another mistake to avoid. Do not transfer property for less than it is worth before you file bankruptcy. Some transfers may result in you being denied a bankruptcy discharge, and many times these transfers can be avoided by the trustee, or individual who administers your bankruptcy (if the trustee avoids the transfer, the trustee can then sell the property for the benefit of your creditors). Some transfers can be undone before you file bankruptcy, but all such transfers and the undoing of the transfers must be disclosed in your bankruptcy. 3. Paying Friends or Family Back Before you File Bankruptcy: If you pay friends or family back, more than 0 in the year prior to filing bankruptcy, the trustee, or person who administers your bankruptcy, can undue this transfer and pay the proceeds to your creditors. Often, if a client comes in and has already paid back a family member, we can either wait a full year (look back period for transfer to insider is a year) or have the friend or family member give the funds back. 4. Failing to List All Creditors: Under penalty of perjury, you must list all known creditors. This includes friends, family and doctors. You may voluntarily pay anyone after you file bankruptcy, but if you owe that person money you must list that person as a creditor in your bankruptcy. 5. Pulling Money Out of a 401K or Other Retirement Fund to Pay Off Debt: 401K, IRAs, 403b, and other retirement accounts are just that: retirement accounts. Often, you receive a tax benefit for having funds in these accounts, or contributing funds to these accounts. These accounts are 100% protected should you file bankruptcy. If you are pulling money out a retirement account to pay off debt, sometimes this may be indicative of a larger problem – and the distribution from the retirement account is just a band-aid. I have met numerous people who have taken funds out of their retirement, often at substantial amounts, to avoid bankruptcy – yet in the end they file bankruptcy. If you are considering pulling funds out of a retirement account to pay off debt, I would advise you to meet with a bankruptcy attorney first. Above are some of the top mistakes to avoid if you are considering filing for bankruptcy. If you would like to learn more about bankruptcy, please call today for your free in-office consultation in Eugene. I look forward to hearing from you. Sincerely, Tom Butcher Like it? Share it! |