Things happen outside of your control sometimes. Whether from medical expenses, divorce, or just plain old poor financial decisions, sometimes bankruptcy is the best option. In case you are considering bankruptcy, here are some things you should definitely not do.
Stop using your credit cards. Stop buying things on credit, especially superfluous items like clothes, electronics, or other “fun” things. Don’t think about getting a cash advance either. If you have to use a card, use a debit card.
Don’t pay off any one creditor or family member. If you make a payment to one creditor beyond what you normally pay or if you pay a family member debt that you owe, it could be labeled a preferential transfer, meaning you gave one creditor preferential treatment over another one, when all of your debts should be seen as equal. When this is discovered, a bankruptcy trustee can sue the creditor you paid in what’s called a clawback lawsuit in order to have that payment returned back to the bankruptcy estate and given out equally to all your creditors. This can cause pretty big delays in the bankruptcy process.
Don’t transfer assets. If you think signing your house or car over to your uncle will help you keep those assets, it won’t. In fact, doing so would raise suspicions of fraud, so it would hurt your cause more than anything else. Besides, most of the time we can use exemptions to help you keep their assets.
No extra money. When you file bankruptcy, all of your assets go into your bankruptcy estate which is managed by the Trustee. That includes all of your liquid assets and personal property. You don’t want extra money going into your account, even if you’re just holding it for a friend or a family member. Everything can potentially be taken by the trustee for the benefit of your creditors, including money from lawsuits and inheritances. There are exceptions, however, which is where a good bankruptcy attorney comes in handy.
Navigating the waters of a bankruptcy can be confusing and time-consuming. One wrong stroke could cause huge headaches and complications. If you’re considering filing bankruptcy, call the Seneca Law Group at (619) 630-8LAW (8529) or contact us here.