So far this week, I have discussed how waiting too long to file bankruptcy can cause you to exhaust your savings and hurt your chances of keeping property or assets you could have saved. To wrap up the week today, I wanted to focus on some regrettable actions certain clients of mine have taken before coming into my office that only made their cases more difficult to resolve. If you are considering filing Chapter 7 or Chapter 13 bankruptcy, here are some things you should never do:
- Repay friends or relatives — Whatever personal loans you might have received from friends or relatives, family members are not allowed to be treated any better than your other creditors. Also, you should keep in mind that if you use a lump payment such as a tax refund to repay a relative prior to filing, the trustee can sue the relative to collect the money and disburse it evenly among all your creditors.
- Transfer property out of your name — Transferring assets to keep them away from creditors is called “fraudulent conveyance.” This cause of action can restrict or eliminate certain types of bankruptcy relief to which you are entitled. The trustee may not only undo the transfer, but he or she can also sue the person receiving the property in order to get it back. Worse yet, many assets that have been transferred away by this method would have been exempt if the debtor had kept them.
- Allow creditors to obtain judgments — If a judgment is issued against you in a collection case, an unsecured creditor can become a secured creditor. If the complaint alleged fraud or other grounds that would make a debt non-dischargeable in bankruptcy, a judgment against you could prevent you from disputing the facts later. Also, if your debts are not liquidated or uncertain in amount, a judgment can liquidate the debt and may increase your debts beyond the eligibility requirements of Chapter 13 bankruptcy.
- Lie to your attorney — Even though this is technically the last item I am listing, failing to be honest with your bankruptcy lawyer can have some devastating consequences. By omitting assets or trying to conceal certain information from your counsel, you risk losing assets, having your bankruptcy discharge denied and may face additional fines or imprisonment.
I understand that bad things tend to happen to good people, and my firm can help you get a fresh start on your finances, no matter what it was that caused them to spin out of your control. Again, one of the most popular questions I hear from clients at the conclusion of a case is, “Why did I wait so long?” There is not always a clear answer, but considering the free initial phone consultation that my firm offers, maybe you will not have to be asking the same question at the end of your own case.
Law Firm of Kevin D. Judd – Maryland bankruptcy lawyer