When you are planning to file a bankruptcy case, it is important to properly prepare. For information on steps to follow when preparing to file, please read our blog titled “Preparing for Bankruptcy.” Below are a few common mistakes that you should avoid:
•Stop using your credit cards. Any charges for “luxury goods or services” (not reasonably necessary for maintenance of your household) on your credit card that totals more than $600 within the 90 days leading up to your filing are presumed to be nondischargeable. This doesn’t mean a single charge that exceeds $600, but the total of your charges withing the 90 day period are more than $600. Thus, it is important to stop using your credit cards prior to your filing.
•Don’t repay a loan to a family member. When you borrow money from a family member, you will be tempted to repay it before you file your bankruptcy case. However, this is a bad idea. The bankruptcy court requires you to disclose any payments in excess of $600 that you have paid to any creditors in the 6 months (or 1 year for insiders or family members) leading up to your filing. If you have repaid a debt to a family member, it will be considered a “preferential payment.” This means that you preferred your family member over your other creditors, which is not allowed. Thus, the trustee can demand that the family member refund the money paid back to the trustee. If your relative fails to do so, the trustee can file a lawsuit to recover the funds.
•Don’t transfer assets out of your name. Many debtors incorrectly believe they can put assets in another person’s name to keep the asset out of the bankruptcy filing. However, the trustee will investigate all transfers (including sales and gifts) made within the preceeding 2 years. It is important to talk with your attorney because many times the assets you want to keep is exempt or protected under the law anyway.
A skilled bankruptcy attorney at DeLadurantey Law Office, LLC, can help ensure that you are fully prepared and ready to file a Chapter 7 or Chapter 13 case. Call us today!
If you are considering filing for bankruptcy protection, call DeLadurantey Law Office, LLC, at (414) 377-0518. We believe that each client should receive the individual attention necessary to reach their financial goals. Recognizing the needs of working clients, we maintain a flexible schedule and offer evening appointments. Initial consultations are always free, and phones inquiries are always welcomed. Find us on the Internet and on Facebook.