Smart Tips for a Smooth Bankruptcy
After years of practicing bankruptcy law, I start to notice a trend in what my potential clients were doing prior to their bankruptcy petition. 99% of the time, they are doing things that they simple are not supposed to do prior to filing for bankruptcy. The things they do will make any bankruptcy attorney cringe.
So, in order to prevent these behaviors from happening in the future, we compiled a “list” of things that are considered bankruptcy “don’ts”. The list sitting in my office ready for my clients to pick up is rather lengthy. I’m only going to cover just a few in this blog.
#1 Cut up your credit cards immediately:
Why not max out your credit cards prior to filing for bankruptcy since your debts will be discharged anyways right? WRONG!
We advise our clients to stop any temptation to use any credit cards at least 90 days prior to filing. As a matter of fact, we tell our potential clients to go ahead and cut them up. This is the first big test to see if you can survive life after bankruptcy. If you cannot do it, chances are, bankruptcy is simply not for you.
If the court believes that you have used your credit card in an abusive way before you file, this can cause delay or difficulties in your bankruptcy case. Common sense tells us that it’s abusive to do this, and chances are, common sense wins in this situation.
#2 Don’t Transfer, Sell, or Otherwise Dispose of Any Property:
Don’t transfer, sell, or otherwise dispose of any personal assets or property (ex: selling a vehicle, yard sale, transferring a title, etc.) prior to your bankruptcy filing.
This one is pretty hard for potential clients to follow. Mr. Smith has a corvette that is paid for; surely he doesn’t want to lose this in his bankruptcy filing so why not transfer the corvette to his son? Quick and simple and no one will EVER know. WRONG!
Your bankruptcy petition will ask if you’ve transferred anything in the last 2 years prior to the commencement of your bankruptcy case. Your Trustee will ask you at your 341 meeting if you’ve transferred anything in the last 6 years.
Now, try answering that question again about what happened to the corvette. Not as easy this time around huh?
The point is that you are asking the courts to help you get a fresh financial start because you truly need it. By transferring assets and essentially trying to “hide” your assets, the courts will frown upon your behavior and you will have repercussions.
#3 Keep Current with Your Secured Debts:
Keep up with your secured debts (ex. Mortgage and vehicle loans) and your utilities. Do not fall behind if you intend on keeping the property. If something is auto-drafted, do not assume that will continue after the bankruptcy. You are responsible for paying your bills!
Just because your unsecured debts will be discharged does not release your responsibility towards your secured debts. If you are planning on retaining your home or your vehicle, you MUST keep these payments current. Filing bankruptcy does not protect you from creditors coming after your home or vehicle if you do not keep them current.
Auto draft is a great and convenient way to get your bills paid but it can also make you pretty lazy and unaware of what exactly is happening with your obligated bills. Many of us do not know that once a bankruptcy petition has been filed, the automatic payments will stop as creditors are not supposed to collect debt. It is your responsibility to make sure these get paid on time.
For a complete list, please contact the Lam Law Firm and we will be happy to supply you with our very own Smart Tips for a Smooth Bankruptcy List.
DISCLAIMER: The information contained on this page is for general information, only. It is not intended to be legal advice, nor should you make legal decisions based on this information. Please consult one of our attorneys to see how the law applies to your particular situation.