What Not To Do If You Are Considering Bankruptcy

What Not To Do If You Are Considering Bankruptcy

What Not To Do If You Are Considering Bankruptcy

Bankruptcy often sneaks up on people and they never even see it coming until it is too late. Usually, it begins with a manageable debt such as a credit card balance, mortgage, or a new car loan. Then something happens to reduce their income. Maybe it is a lost job, a hospitalization, a lawsuit, or any number of other things. Once this happens people often find themselves in a position to no longer be able to afford their minimum payments. Then their interest rates climb higher, and their debt becomes overwhelming, while the debtor’s ability to keep up with payments continues to decline. Once this happens, people often find themselves looking for relief in the form of a way out, and a fresh start. This is when they begin to consider the legal debt relief valve known as Bankruptcy.

If this situation sounds familiar to you and you find yourself considering bankruptcy as an option then there are a few things to consider. In this article, we are bringing you a list of things Not To Do.

  1. Do Not Pay More Than The Minimum To Your Creditors

You will want to continue to pay your utility bills as well as any secured debt if possible such as a car loan, mortgage, etc. first and then unsecured debt next but do not pay large or extra payments to any one creditor – even if you can do so. The reason for this is that after filing for bankruptcy the courts will look for any type of payments that they consider to be ‘preferential transfers. The court considers preferential transfers to be any payment that favors one creditor and short-changes others. The courts frown on this and will often demand the creditor to return the excessive payment. This could put you in a worse situation than before you made the large payment, especially if you made that large payment to a friend or family member.

  • Do Not Take Out New Loan Or Incur New Debts

If you are planning on filing for bankruptcy then do not take on any new debt. If you do, then the creditor can argue that you did so with the express intention of not paying it back ever via the bankruptcy process. If the court agrees then they will not discharge that debt in the bankruptcy process and you will remain responsible to pay it back in full, as agreed.

  • Do Not Transfer Ownership of Assets

Once you file for bankruptcy the courts will be looking for attempts to hide assets or conceal a fraud. A common strategy for those attempting to hide their assets is to give a large gift of cash or to transfer ownership of land, cars, or other valuables to family members, friends, or business associates. If the courts suspect this, then it will only serve to complicate your case. As the courts do not take too kindly to attempts of fraud. Unusual transactions or transfers will only make your case and your debts more difficult to discharge.

  • Do Not Fail To Inform Your Creditors

The legal system allows creditors a great amount of leeway when it comes to collecting what is owed to them. Some of the tools at their disposal include seizing assets and garnishing your wages. The same legal system, however, will forbid them from utilizing these tools though once you file for Bankruptcy.

As a general rule, it is easier to prevent them from seizing your assets or wages than it is to get them to return them. So let your creditors know about your bankruptcy should you find yourself in a position of being threatened by them. It will all be public information very soon anyway.

  • Do Not Drain Your Retirement Accounts

Your natural instinct when finding yourself drowning in debt is to utilize your savings to keep yourself afloat, and once you go through your savings it is tempting to dip into your retirement accounts. We implore you not to do that. In almost all cases, there will be exemptions that allow you to keep your retirement funds. Please contact a bankruptcy attorney before cashing in your 401K.

  • Do Not Fail To Schedule A Free Consultation With Devon Barclay

Bankruptcy can be a difficult decision and is sure to conjure up a lot of questions about what is, what isn’t, how long to recover, and the overall process in general. Devon Barclay, PC offers Free Consultations and offers the lowest payment plans anywhere in Colorado. If you are considering Bankruptcy or need a fresh financial start. Then please do not hesitate to fill out the form below or call Devon at 720-515-9887 for more pressing concerns.

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Devon Barclay, PC

    The information provided on this site is not legal advice. The attorney listings on the site are paid attorney advertising. Each of the attorneys promoted through this website are promoted based upon their willingness to pay for the advertising. This website is not an endorsement of the attorneys’ services. The site is not a lawyer referral service or prepaid legal services plan. In some states the information on this website may be considered a lawyer referral service. No attorney-client or confidential relationship is or will be formed by use of the site. Photos are models and are not actual clients. Prior results do not guarantee a similar outcome. By an Act of Congress and the President of the United States, the attorneys who advertise through this website are Federally designated Debt Relief Agents. They help people file for relief under the U.S. Bankruptcy Code. Disclosures Required Under the U.S. Bankruptcy Code.