6 Mistakes To Avoid Before and During Bankruptcy
Dealing with serious, on-going financial trouble is one of the most stressful things anyone must endure. The prospect of filing for bankruptcy is so daunting that many people try to find ways out of it, only to end up making the same irresponsible financial decisions that initially brought them to their current state. Even after their bankruptcy case has been filed, people often continue to make bad financial choices. Here are a few to steer clear of:
1. Repaying a family member or friend
Since you feel an obvious moral responsibility to repay a family member or friend, you might be prone to paying them before you pay your creditors. This isn’t a wise choice, because a bankruptcy trustee can reclaim any amount repaid to a family member within one year of filing for bankruptcy. It’s important to note that bankruptcy trustees usually don’t go after any amount smaller than $2,000.
2. Running up your credit card
One of the smartest things you can do after filing for bankruptcy is stopping the use of credit cards. When you purchase luxury goods and services ($500.00 +) within 90 days of filing, they are considered nondischargeable, and might be found to be due and owing. Similarly, if you take out cash advances totaling more than $750.00 within 70 days of filing, these will also be considered nondischargable, and might be found to be due and owing, as well. As you can see, using credit cards when you file for bankruptcy is risky business. Although it might be tempting to “buy now and worry later,” it’s really not worth it in the long-run.
3. Transferring property out of your name
A bankruptcy trustee can undo a transfer of property that you previously owned. This can happen if the transfer was made within four years of the filing for bankruptcy, with the intent to hinder, delay or defraud a creditor – or merely if a fair price was not received.
4. Taking out a second mortgage
You probably shouldn’t take out a loan against your home with the intention of lowering your equity. Filing for bankruptcy can often save your home. If you take out a second mortgage to pay credit card debt, you may be putting your home at risk.
5. Liquidating your retirement account
You can eliminate your debt and usually keep whatever you have in a retirement account, free and clear. That is to say that retirements accounts are usually protected. Still, many people take money out of these accounts in a last-ditch effort to pay off their credit cards.
6. Failing to appear in court
When you initially file for bankrupcty, it doesn’t necessarily mean that you’ll avoid a lawsuit. A collection case can continue until your bankruptcy case is completely filed.
- all fees must be paid
- all vital information must be given to your bankruptcy attorney
- you’ve read, signed, and returned all necessary bankruptcy forms to your bankruptcy attorney
- you’ve completed the debt counseling program
If you’re thinking about filing for bankruptcy in Atlanta, don’t hesitate to contact the Adkins Firm. The Adkins firm are top-notch Atlanta bankruptcy attorneys, take can get you out of debt and in control of your financial future.