Bankruptcy Landmines to Avoid

There is an old saying that “Pigs get fat, but hogs get slaughtered.”

Bankruptcy gives you powerful remedies to escape from oppressive debt and still keep all your essential property.  Occasionally, however, you hear stories of people who try to abuse the system and get away with too much, usually with disastrous consequences.

For most people, being honest and providing complete information to your bankruptcy lawyer will avoid any of these complications.

Repaying a family member.

Resist the temptation to repay your family members in the one year before filing bankruptcy.  It is considered a “preferential” payment, and your bankruptcy trustee can compel your family members to pay it back.  Small, customary gifts and ordinary regular payments are usually okay.

Transferring property to a family member.

The bankruptcy trustee can set aside transfers of property you make within one or two years of filing bankruptcy if the transfer was made without an actual exchange of value, or to an insider family member, or made with the intent to conceal, hinder or defraud a creditor.  Come and see us first before making any such transfers.  Usually, we can help you find an exemption for the property, or plan a better option.

Running up your credit cards.

After you have made your decision to file bankruptcy, you cannot run up charges you do not intend to repay.   Charges totaling more than $500.00 to one creditor within 90 days of filing, are presumed non-dischargeable.  Cash advances totaling more than $750.00 for all creditors within 70 days of filing are also presumed non-dischargeable.  Charges for luxury items or services within 90 days of filing are non-dischargeable.  Even worse, it is a crime to charge for things you have no intention or ability to repay.

Concealing an asset or keeping information from your bankruptcy attorney.

Bankruptcy is serious business.  Lying on a bankruptcy petition can be a crime, and land you with a fine or imprisonment.  Even less serious cases can result in your loss of a discharge, or loss of an asset.  Don’t risk such consequences, no matter what you may have been told.  Provide complete information to your bankruptcy attorney and we can usually help you find an option that allows you to keep the property.

How we avoid these unintended consequences.

When you come in to see us, we will investigate your finances thoroughly and use a checklist to ensure we don’t miss anything.  As long as you provide us with accurate and truthful information, the chances of any unintended consequences are virtually eliminated.

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