What to Avoid when Filing for Bankruptcy, Part 2

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!

What Bankruptcy Can and Cannot Do, Part 1

bankruptcy lawyer san diegoBankruptcy is a powerful remedy to shield debtors from unfair debt collection and offer them debt relief. However, it doesn’t solve all financial problems. For example, in some situations, Chapter 13 can help, while Chapter 7 cannot. Before you file for bankruptcy, discuss your debts and possibilities with a bankruptcy lawyer San Diego residents trust. In the meantime, read on to find out what you can accomplish through bankruptcy.

What Bankruptcy Can Do

Here are some of the things that filing for bankruptcy can do:

Eliminate unsecured debts. Bankruptcy can wipe out unsecured debt such as personal loans, credit card debt and medical bills. Unless you have a special, secured credit card and the creditor doesn’t have a lien on your property, the creditor doesn’t have the right to any of your items if you fail to pay the debt.

Chapter 7 has a greater capacity to eliminate your unsecured debt than Chapter 13. When a debtor files Chapter 13 bankruptcy, they agree on a debt repayment plan. Though secured debts have priority, the debtor will usually pay back a portion of their unsecured debts, as well.

Wipe out certain types of liens. A lien is a creditor’s conditional right to retain possession of a debtor’s property. Bankruptcy cannot get rid of most creditor liens but judgment liens can qualify for “avoidance” if they meet certain conditions.

A judicial lien is a lien that resulted from a judgment entered against you in a legal procedure. Chapter 7 can allow you to have these judgments removed in the court proceedings. If you decide on Chapter 13, you could include the judgment in a repayment plan, ending in a discharge of the lien. Contact your San Diego bankruptcy lawyer, who will assess if the lien can be handled in the court process.

Reduce secured debt. Chapter 7 bankruptcy cannot help you with secured debt. If you want to keep the property and its market value is less than what you owe, Chapter 13 may allow you to lower your secured debt. You will then pay off the reduced amount through your repayment plan.

There are limitations to secured debt reduction when the property is acquired within a certain time period near the filing. The time limitation depends on the type of loan the debtor wants to cram down. Nevertheless, Chapter 13 is a powerful remedy that can provide huge savings.

Keep certain assets. In a Chapter 7 filing, the debtor can keep certain assets, which are called exempt property. Property that is free from liquidation includes items that are necessary for living and working.

Chapter 13 bankruptcy can prevent a foreclosure and allows you to keep all of your property, including non-exempt assets. In this case, the debtor agrees to make a monthly payment and follow through their repayment plan. The plan can last between three and five years, which is determined by the debtor’s family income.

Stop creditor harassment and collection attempts. Filing bankruptcy can prevent unsecured creditors from taking further action to collect their debt. The Fair Debt Collection Practices Act (FDCPA) shields debtors from unfair or abusive tactics and practices by debt collectors.

In case you are experiencing creditor harassment, consult an experienced bankruptcy lawyer San Diego, who will explain your rights and make sure that your debts are collected in accordance with the law.

Consult a bankruptcy lawyer San Diego

Whether you are considering bankruptcy or are in the process, having a knowledgeable bankruptcy lawyer in San Diego by your side can save you time and money, ensuring that your bankruptcy filing and the ensuing process go smoothly.

Reach out to Chang & Diamond, APC for a free consultation at (619) 312-4900 or (800) 718-8118. Together we will go through your options so that you can start fresh the best way you can!

How To Avoid Your Case Being Mistaken for a Bankruptcy Fraud

Most people filing for bankruptcy are honest, hard-working citizens caught in an unpleasant financial situation. However, there are also those looking to abuse the laws and find loopholes that will benefit their selfish goals. People who often try to abuse the law this way usually end up in debt through fraudulent acts. To get out of this debt they resort to other fraudulent acts, in this case, bankruptcy frauds.

But sometimes, even honest debtors tend to make mistakes that the court may misinterpret as an attempted fraud. In order to learn how to avoid making mistakes that could lead to your case being mistaken for a bankruptcy fraud, you should first get to know everything about them.

So what does a bankruptcy fraud entail? There are actually several types of bankruptcy frauds. To put it simply, any dishonest practice people use when filing for bankruptcy is considered fraudulent. This includes not disclosing all assets, falsifying forms, handing incomplete forms, filing for bankruptcy several times over, bribing a trustee or not using real personal information. Moreover, these practices are often used in conjunction with other criminal activities, often to cover them, such as money laundering or identity theft.

Common Bankruptcy Frauds

Not disclosing their full list of assets from the court is the most common way debtors try to play the system. They do this in hopes that the unfiled assets will not be liquidated once the case proceeds. Sometimes, debtors might even transfer some of their assets to their friends and family members so the court cannot trace them.

Sometimes debtors try to deceive the court by filing for bankruptcy several times in several states. They do this either under their real name or by using a false identity, sometimes even both. While the court is not likely to fall for this fraud, it is bound to slow the process down. Because of that, debtors often use it to try and buy themselves more time in order to hide their assets. However, in the majority of cases, bankruptcy courts are not fooled easily.

Another common case of bankruptcy fraud occurs often and on a much larger scale. Agents allegedly representing a consulting agency target individuals in bad financial situations and petition them offering to help. And while they lead people to believe they are offering them financial aid, in reality, they are filing for their bankruptcy. These agencies aim to prolong the cases and charge the victims of this scam insane fees and rob them of their savings in the process.

Why Do Debtors Resort to Bankruptcy Frauds

Debtors looking to hide their assets do so in hopes of filing for Chapter 7 bankruptcy. As you already know, some secured debts may be discharged in Chapter 7 bankruptcy. However, in the case of Chapter 13 bankruptcy debtors are presented with a repayment plan that involves monthly repayments for anywhere between three to five years. While their debts are discharged after this, their bankruptcy case is logged for a decade after the discharge and affects their credit score during that period. To avoid being blacklisted this way, debtors resort to frauds.

What is the Punishment for a Bankruptcy Fraud

If prosecutors can prove that the data was deliberately falsified, the debtor is convicted. Bankruptcy frauds are considered a criminal offense. The punishment for a bankruptcy fraud is a five-year prison sentence or a hefty fine. Furthermore, if the court deems necessary, debtors may even have to serve a prison sentence and pay a fine at the same time.

Bankruptcy courts are always on guard, ready to expose any attempts at fraudulent behavior. However, sometimes even honest debtors make mistakes when filing for bankruptcy that may be misinterpreted as trying to hide their assets or give false information. If you want to make sure this doesn’t happen to you, make sure to hire a reputable San Diego bankruptcy lawyer to help with your case. If you need expert legal representation before the bankruptcy court don’t hesitate to contact the BK Lawyers at (619) 312 – 4900.