Things You Should NOT Do If You’re filling for Bankruptcy
Tuesday, May 9th, 2017 | Bankruptcy | No Comments
Things You Should NOT Do If You’re filling for Bankruptcy
Perhaps you’re facing a challenging financial situation due to high medical bills, unemployment, or a recent divorce. Your debts are accumulating, and there’s no money to cover what you owe your creditors. Now you’re considering bankruptcy as your only remaining solution, well, it’s a good move, but you need to plan in advance to steer clear of common mistakes. To have a smoother bankruptcy filing process, it’s crucial that you avoid these ten things:
Transferring Property or Money
Transferring your assets to other people to keep them safe from the bankruptcy proceedings is unnecessary. In fact, this does more damage than good since the court can consider these attempts as fraudulent, even if you had not intended to conceal the assets. Owning assets don’t keep you from filing bankruptcy. Moreover, this doesn’t imply giving up all your assets.
Paying Off Certain Creditors
Any payments you make to certain creditors within the 90-day period before filing for bankruptcy is considered as a preferential transfer and may be problematic in your case.
Under Tennessee law, all creditors should be treated equally – no creditor should receive special preference over the others. In most cases, the bankruptcy trustee ends up suing the creditor to recover the amount you’ve paid them so that it can be distributed among your creditors equally. Unfortunately, this process may delay your bankruptcy filing as well as ultimate discharge.
Filing under the wrong chapter
Although not entirely distinct, both Chapter 7 and Chapter 13 bankruptcy forms give you the chance to get out of debt. Thus, you should discuss your financial situation in detail with your bankruptcy attorney to ensure you have all the information necessary to making this important decision.
Using Your Credit Cards
If you’re considering filing for bankruptcy, the very first thing you shouldn’t do is using your credit cards. You would never want ever to give the impression that you are “exhausting” your credit cards. All your creditors review your account activity once they receive the bankruptcy notification and may file a non-discharge ability complaint to have you repay the debt. However, you can still use a debit card that is linked to your bank account to make purchases.
Depositing Extra Money in Your Bank Account
No additional money should be deposited into your bank accounts apart from your sources of incomes such as your job. You shouldn’t deposit anything else or accept checks to deposit from people that are trying to assist you to come out of your debts. For your personal business, you shouldn’t run your business transactions via your personal accounts. Always consider keeping everything separately to avoid confusion and any suspicion of fraud.
Filing Lawsuits
Tennessee’s exemption laws may not protect your lawsuit settlement if you mix the funds with other money. If you deposit money from a lawsuit in an account with money from other sources, the bankruptcy trustee may conclude that these exemption laws no longer apply.
Accepting Future Payments
Once you file for bankruptcy, every other payment you are to receive in the future, as well as the funds that you already have, will be a part of your bankruptcy estate. In simpler terms, your bankruptcy trustee will use this money to repay your creditors. Depending upon when you receive the money, future payments may comprise of things such as tax refunds, or even an inheritance. These payments become the bankruptcy’s court property until when your creditors become satisfied.
Paying off unsecured debt using your retirement fund
The majority of individuals do this for fear of their retirement fund being seized during the Bankruptcy Knoxville TN proceedings. Usually, your retirement account will be exempted during your bankruptcy. Therefore, you’d rather keep your funds in your retirement account than using it to cover your unsecured debt.
Allowing your Insurance Coverage Lapse
It’s always a wise decision to file for bankruptcy after renewing your insurance policy, if only you need to retain your liability insurance valid to insure unknown liabilities. This simply means you’ll have insurance cover that extends for at least a year into the future. On the contrary, it might be hard to get an insurance company willing to issue a new policy or renew your business coverage. Your existing coverage cannot be canceled as a result of your bankruptcy so long as you still make on time payments.
Providing dishonest, incomplete or inaccurate information
Under Tennessee law, you are obliged to disclose all information regarding your financial history, income, assets, debts, expenses, and lawsuits against you. Bankruptcy protects you only from the debts listed on the paper. If you leave out an asset, you may end up losing it unnecessarily. If you are afraid of losing an asset after you file a bankruptcy proceeding, you should discuss the matter with your bankruptcy lawyer before it’s too late to make changes to your case.
If you’re planning to file for bankruptcy, and you cannot shun from some of the things mentioned above, you can take advantage of the ‘look-back’ periods by delaying your filing. This simply implies that the courts will only take into consideration certain transaction types within a specified period. Consult a knowledgeable and experienced bankruptcy attorney to guide you based on your unique situation and help you navigate bankruptcy Knoxville TN.
