What to Avoid when Filing for Bankruptcy, Part 2

May 4

In case you have plans to file bankruptcy, it is advisable that you get prepared ahead of time and avoid making mistakes that may delay debt relief or even jeopardize the outcome of your case. For this reason, it is recommended that you consult a bankruptcy lawyer San Diego residents trust. A dedicated and skilled attorney will educate you about your rights and provide you with all the information about declaring bankruptcy.

Coping with the emotional aspects of having to file for bankruptcy can be difficult and it can lead to a number of mistakes, especially if you don’t have legal help. Those mistakes are not always intentional. Luckily, they can be avoided.

Transferring assets

Do not change titles or move your assets prior to bankruptcy. If you transfer your property out of your name before filing, it may seem that you are trying to hide your assets. A bankruptcy trustee has the right to undo the transfer.

A trustee can legally undo a transfer made within up to four years of the filing if the action is considered fraudulent. The trustee can do it on the grounds of actual fraud, if the debtor transferred assets with the intent to defraud, hinder or delay a creditor, or on the grounds of constructive fraud, if the debtor was insolvent at the time of the transfer or there was no reasonably equivalent value in return.

Even if your intention isn’t to hide assets, the trustee could bring an action to get your asset(s) back into the estate and revoke any discharges. Don’t put your bankruptcy case at risk and make changes on your own. Instead, turn to a well-versed bankruptcy lawyer San Diego residents can rely on. With the adequate use of bankruptcy exemptions, they can help protect most personal property.

Running up new debt

Do not sign up for cash advances or run up your credit card balances before you file bankruptcy. The chances are you will have to repay your debt. Credit card debt is unsecured so you get to discharge it either through Chapter 7 or Chapter 13 bankruptcy.

Moreover, you may end up being liable for racking up a huge amount of debt if you max out your creditors within 90 days of filing. This means that you did it because you knew that you were about to file bankruptcy. The creditor would have to prove that you have committed fraud.

Draining your retirement account

A common mistake that many people make is to liquidate a retirement account in an effort to pay down existing debts. Retirement accounts are generally protected during bankruptcy, so rest assured your retirement funds will be off-limits to creditors. Also, some of the debts you might want to pay with these funds could end up being discharged through bankruptcy.

Not working with your bankruptcy lawyer San Diego

Your lawyer needs to know all about your income, assets and debts in order to assess all options, mitigate any risks and guide you through the entire process. If you are looking for a bankruptcy lawyer San Diego residents rely on, reach out to the San Diego and Riverside County bankruptcy law firm of Chang & Diamond, APC for legal assistance and representation. Call us at (800) 718-8118 or (619) 312-4900 – today!