Bankruptcy laws are often complex in nature and some filers make mistakes before they ever file their petition at the courthouse. Making certain mistakes may have an adverse effect on bankruptcy or even prevent someone from qualifying for bankruptcy. Some mistakes to avoid include: Continuing to Use Credit In Bankruptcy?Some people may make purchases with credit weeks or months before filing bankruptcy. They may also make payday advances. However, conducting these transactions may raise a negative implication regarding whether the filer is filing bankruptcy in good faith. In some situations, bankruptcy may even be considered fraudulent. In certain circumstances, a bankruptcy petition may be denied, such as if there was a recent payday loan. Even if the bankruptcy court does allow the filing, having recent debt can give creditors grounds to object. Transferring Property In Bankruptcy?In order to protect certain assets, some filers may transfer money or other property into the name of someone else, such as a relative, spouse or child. However, this tactic can also result in a bankruptcy fraud investigation. Furthermore, transferring property out of a person’s name may cause the filer to lose the bankruptcy protection that he or she may have retained. Individuals can file for bankruptcy even if they have assets and they may even be able to keep them but this cannot happen if the filer no longer legally owns the assets. Selectively Paying CreditorsMany individuals approach debt as a moral obligation. As such, they may feel that a debt to a friend, relative or employer is even more important and may choose to pay off these debts before filing bankruptcy. However, selectively paying creditors can spell disaster for bankruptcy filers. The bankruptcy trustee is often given the power to sue the individual that was paid back in order to recuperate these funds for the bankruptcy estate. Altering Other Financial TransactionsJust as a person should continue to pay debts as he or she normally would and not take any special action, he or she should not take any special action regarding deposits. This includes refraining from making deposits of funds that do not actually belong to the filer or conducting business transactions through a personal account. Not Filing Income Tax ReturnsA filer’s tax returns are critical as a source of information to complete the necessary filings with the court. They help show the filer’s current earnings and show ownership of certain assets that the bankruptcy lawyer may try to protect. Not having tax returns may result in a dismissal of the bankruptcy case. Making a Legal ClaimEven if a filer has a legitimate legal claim against another person or entity, this claim becomes the asset of the bankruptcy estate once the bankruptcy petition is filed. Don’t Provide Inaccurate, Incomplete or Dishonest InformationOn your bankruptcy paperwork, you’re required to provide under penalty of perjury complete and accurate information about all of your assets, debt, income, expenses and financial history. If you knowingly misrepresent your information, such as by failing to disclose an asset, you could be subject to criminal penalties, including fines of up to $250,000, twenty years in prison, or both. Also, if you don’t file all of the paperwork, the bankruptcy court might dismiss your case, or you might have to file additional papers to correct the paperwork and pay more fees. If you leave a creditor out, that debt might not get discharged. And, if you forget to include an asset, the Chapter 7 trustee might find it and take the property. The Federal Bureau of Investigation (FBI) investigates bankruptcy crimes, so bankruptcy court is not the place to be less than forthright. Most bankruptcy lawyers can solve your problem in an appropriate manner. If you’re not sure about the potential ramification of your actions, talk to a bankruptcy attorney first. If perhaps you ran up debt during the 70 to 90 days before filing bankruptcy, beware (unless it was for necessities of life, such as food, clothing, and utilities). The creditor might object to your discharge by arguing that you took out the loan without any intention of paying it back (called fraud). As a general rule, if you took out cash advances or used a credit card to buy a luxury item within 70 to 90 days of filing bankruptcy, then you’ve committed “presumptive fraud” and might not get to discharge the debt. Don’t Move AssetsWhile the bankruptcy schedules ask that you provide information about assets you own (or will own), some people might be tempted to sell, transfer for safekeeping, or hide assets before filing bankruptcy. Don’t do it. If you do, you might be denied a discharge and even be subject to criminal penalties and it’s unlikely that the risk will be worth any perceived reward. Of course, you might have sold property before you filed your bankruptcy case to pay your expenses, such as your rent, food, or utilities, and doing so isn’t wrong on your part. Be prepared to explain all of your transactions, and, when appropriate, provide supporting documentation. Bankruptcy Disclosure RequirementsFiling for bankruptcy is a transparent process. Even though you can keep (exempt) the things you’ll need to work and maintain a household, your creditors have a right to everything else. So you must agree to disclose every aspect of your financial situation in your bankruptcy paperwork before receiving the benefits of bankruptcy. One way the court ensures that creditors get their share is by examining up to ten years’ worth of prior financial transactions. Everyone who files for bankruptcy individuals and businesses alike will report previous transactions on Your Statement of Financial Affairs for Individuals Filing for Bankruptcy form and include it as part of the official paperwork filed with the clerk. (Legal professionals often refer to this as the “SOFA” form.) If the court discovers that you transferred property in an attempt to avoid paying a creditor or broke another bankruptcy rule, the court will unwind the transaction and disperse the recovered funds to the creditors. Here’s a sampling of information you’ll need to include: Don’t Fail to File Income Tax ReturnsIf you aren’t required to file tax returns for instance, you receive disability insurance you don’t need to worry about this requirement in a Chapter 7 bankruptcy. If you’re supposed to file taxes, however, but haven’t done so for the two years before filing bankruptcy, you’ll run into problems. Your tax returns are crucial to determining your current and past earnings and asset holdings, as well as satisfying potential priority tax claims. Without your returns, completing your paperwork, and (if applicable) a Chapter 13 plan, will be next-to-impossible and will stop your bankruptcy in its tracks. For instance, there’s no way for the IRS to determine your tax obligations without a tax assessment. Free Initial Consultation with LawyerIt’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
Ascent Law LLC
8833 S. Redwood Road, Suite C West Jordan, Utah 84088 United States Telephone: (801) 676-5506
Ascent Law LLC
The post What Should You Not Do Before Filing Bankruptcy? first appeared on Michael Anderson.
4.9 stars – based on 67 reviews
Do They Freeze Your Bank Account When You Die? Ascent Law St. George Utah OfficeAscent Law Ogden Utah Officevia Michael Anderson https://www.ascentlawfirm.com/what-should-you-not-do-before-filing-bankruptcy/
0 Comments
Leave a Reply. |
Probate LawyerProbate Lawyer in West Jordan Utah. If you need probate lawyer, trust attorney, inheritance counsel, living trust, last will and testament, call 801-676-5506 now for a free consultation. Archives
April 2023
Categories |