Avoiding Common Bankruptcy Mistakes
No one is perfect.
However‚ striving for perfection in the course of your Los Angeles bankruptcy filing will help ensure a successful discharge of debts that will ultimately put you on more solid financial footing moving forward.
Finding a good attorney who has extensive experience will be critical in helping you to avoid some of the most common pitfalls. Still‚ there are things you can do while you merely weighing your options that are worth bearing in mind.
First‚ in the months and weeks leading up to your filing‚ you want to avoid racking up more debt in the form of credit cards and cash advances. There is a misconception that if debts are going to be discharged anyway‚ what does it matter? The answer is it matters a lot. To begin‚ any debts you incur within three months prior to your filing are going to be presumed non-dischargeable. (This is why we sometimes advise clients to wait a little while before filing if they have very recently been hit with a large debt unexpectedly.) What’s more‚ you may be required to pay debts incurred even before that‚ if the court determines you took out the debt with no intention of paying it back.
Secondly‚ avoid trying to save your property by gifting it to family or friends. There are certain items that can be protected in a bankruptcy‚ and it’s best to talk to a lawyer if you have concerns regarding specific pieces of property. But you should know that if you give away property or attempt to hide it from your creditors‚ your bankruptcy trustee has the authority to reverse those property transfers and force you to hand it over anyway. You also don’t want to risk having your entire discharge denied because you were trying to hold on to one thing or another.
Thirdly‚ avoid dipping into your retirement account for extra funds leading up to the filing. Most of the time‚ your retirement money is protected from seizure. Usually‚ you have to pay a penalty to take it out and once it’s gone‚ it’s gone. If you end up filing for bankruptcy after doing this‚ you’ve effectively thrown good money after bad. Talk to your attorney if you aren’t sure which bills to keep paying on and which you should probably stop paying if you intend to file.
Another thing to keep in mind is that it’s never a good idea to ignore pending lawsuits. Some people think it won’t matter anyway‚ as those debts are going to be discharged. However‚ if you haven’t filed yet‚ you won’t be protected from any property liens or other actions the court imposes. Plus‚ you need to make sure your rights are protected. At the very least‚ let your attorney know so that he or she can advise you of the best way to address it.
Finally‚ keep an open and honest dialogue with your attorney. Clients sometimes conceal information because they worry their lawyer won’t understand or they think that by not disclosing everything‚ they might be able to keep more of it. You’re only hurting yourself when you do this. Your attorney is your advocate. He or she is the one who is going to fight for you to keep your assets‚ and it’s important that all the information be on the table. Plus‚ if you are found to have concealed assets from the court‚ you jeopardize the entire filing and you may even face criminal charges. Providing your lawyer with all relevant information means he or she will better be able to represent you and protect your interests.
If you are contemplating bankruptcy in San Fernando Valley‚ contact Nader‚ Naraghi & Woodcock‚ APLC to schedule your free consultation. Call (800) 568-0707.
Avoid these bankruptcy mistakes‚ May 21‚ 2013‚ By Justin Harelik‚ Bankrate.com