02 Jan How to protect yourself while you are in bankruptcy
By Atty. Crispin Caday Lozano
If you are considering bankruptcy, here are some actions you can do to protect yourself and your assets.
Actions you SHOULD DO:
- Take your situation seriously. Ignoring your financial trouble will not make it go away. Speak to a bankruptcy attorney as soon as possible.
- Commit yourself to a budget. This is always the easiest thing to tell someone facing financial hardship and is sometimes impossible to achieve. But if you face a very tight financial situation, you need to try to maintain daily, weekly and monthly budgets. By simply doing this, you will have more and more success living within the budget.
- Be honest about all your debts and assets. To best serve you, you need to disclose all of your financial information to your attorney. Your attorney can provide a feasible resolution in bankruptcy. Keeping your attorney informed will create the best results.
- Continue making payments on vehicles and homes you intend to keep. If you are behind on your payments, your creditors can repossess your property.
- Find a way to entertain your family without spending any money. There are a lot of things on how to enjoy your day without depleting your budget. Family and friends should be able to recognize that spending time together can be as enjoyable as spending money together.
Actions you SHOULD NOT DO:
- Withdraw money from your 401k. 401k is exempt from seizure under virtually all circumstances. Generally, this account is exempted in bankruptcy. Untimely withdrawal makes you liable for taxes and penalties that are not dischargeable in bankruptcy.
- Buy massive purchases and take out large cash advances from your credit cards before filing. The Court may consider your petition fraudulent and dismiss your claim if it sees excessive purchases or cash advances six months to one year prior to filing bankruptcy.
- Transfer property out of your name. Concealing your assets is illegal and risky. If you have an asset that cannot be protected in a bankruptcy filing, you need to discuss your situation with your attorney. There are legal ways to protect assets. Transferring an asset out of your name and immediately filing bankruptcy is not a smart way.
- Take cash advances from one credit card to make payments on Once you start juggling credit cards, you are in serious trouble. Taking excessive cash advances six months to one year prior to filing bankruptcy may result in an adversary proceeding (litigation in bankruptcy) or the court may dismiss your case.
- Pay $600 or more back to relatives or business associates who have lent you money. Payment of a total of $600 or more to an “insider” (which includes relatives and business associates) within one year before you file bankruptcy is a “preference.” The trustee may recover preferences from the person that was paid and divide the money between all of your creditors. (Payment of $600 or more to any other creditor within 90 days before the case is filed is also a preference.)
- Speak with creditors without your bankruptcy attorney present. After you file bankruptcy, your lawyer will communicate with your creditors on your behalf.
- Consider bankruptcy an easy way to get rid of all your debts. Not all debt is discharged in bankruptcy, including certain tax debt, student loans and child support payments.
Note: This is not a legal advice and you need to speak to an attorney about your personal circumstances.
- Bankruptcy will actually improve your credit within one year because your unsecured debts are discharged. Although the bankruptcy will be in your records for 10 years, not filing bankruptcy will make your credit even worse until most of your debts are paid in full.
- If you are being sued by your creditors, most money judgment can be eliminated in bankruptcy.
- Collection actions continue and you can be sued if you are in debt settlement.
- Chapter 7 will eliminate all unsecured debts. If you are near retirement age, you must eliminate most of your debts.
- Bankruptcy will stop foreclosure actions. If your trustee sale date is 10 days before, you can still file for bankruptcy.
- If your salary is being garnished, you have a court case about debts or you are being harassed by creditors, bankruptcy can stop garnishment, court cases, harassing creditors and eliminate the debt.
- Bankruptcy is cheaper, faster and safer than debt settlement which has no guaranteed success.
- Preserve your health, eliminate stress and live a happy life by eliminating your debts which is the root of all problems.
Crispin Caday Lozano is an active member of the State Bar of California since 1999. You can contact him at 1-877-456-9266. Email questions to firstname.lastname@example.org. Visit our website at www.crispinlozanolaw.com/