Filing for Bankruptcy? Avoid These 6 Things
If you have found yourself in a financial predicament caused by a recent divorce, the loss of a job, or high medical bills, you might already be mulling over the idea of filing for bankruptcy to eliminate your debts. However, you should be careful when navigating these financial waters as there are some decisions that have the potential to harm your bankruptcy case, which you should be aware of. It is crucial to avoid making these mistakes, lest you make a bad situation worse.
Transferring Assets: A commonly held belief is that if you transfer assets, such as houses, cars, or cash to relatives or other individuals who might shield it for you, it means that those assets will be safe from bankruptcy proceedings. Doing so not only provides no protection, but might also get you into trouble with the court, and may be perceived as fraudulent. Filing for bankruptcy does not mean you will lose all of your assets and many are actually able to keep them, so hiding them is unwise.
Paying Off Some Creditors: If you think paying off some of your creditors will improve your chances at obtaining a bankruptcy, you are mistaken. Making a payment to completely settle debts with certain creditors and not others is known as a preferential transfer and will ultimately delay your case and jeopardize your bankruptcy.
Using Credit Cards: One of the first things you should do if you are having financial problems and considering bankruptcy is to stop using your credit cards or take out any cash advances against your credit cards. You can continue to use a debit card that is connected to your bank account to pay for purchases.
Deposit Extra Funds Into Your Bank Account: Money deposited into your bank account should only come from sources of income and not checks from friends or extra money you have been holding onto. While friends or family might want to help you, you should not accept cash or checks to deposit until you are able resolve your financial issues. If your source of income is a business, keep business transactions separate from personal accounts to avoid confusion.
Filing Lawsuits: When you file a lawsuit, your assets, which includes current and future payments awarded from a lawsuit, are transferred to the bankruptcy court. As such, you might not receive money awarded to you, even if your case is unresolved, or the award has yet to be determined. Some states have exemptions regarding how much they are allowed to take, while others do not.
Accepting Future Payments: All payments you expect to receive in the future are part of your bankruptcy estate and, therefore, your bankruptcy trustee can seize future money for the purpose of repaying your creditors. Future payments include tax refunds or inheritances, depending on when it is received.
If you are currently considering bankruptcy and are unsure how to proceed, an experienced bankruptcy attorney can help guide you through your situation and ensure that you do not make any unnecessary mistakes that could cost you.
Bankruptcy Lawyer in Jacksonville & St. Augustine
If you are struggling to pay your bills and are overwhelmed by mounting debt, you do not have to continue to endure this on your own. At Albaugh Law Firm, we believe there is always a solution to life’s biggest problems and are here to help you take the steps to find it. Our bankruptcy attorneys have been helping clients attain debt-free futures for over 60 years. Let us help you.
Call our legal team today at 904-471-3434 for a free consultation.