Even though you are already in financial dire and have concluded that your only option is to file for bankruptcy so that you can attempt a fresh start, there are a few mistakes that you may make or continue to make that can hurt your case for bankruptcy. Do not take part in or stop doing any of the following mistakes:
Paying off one of your credit cards in full. It may seem like the opposite of what you should be doing but paying off specific debts may actually prolong your case. When you file for bankruptcy, you are assigned a trustee. This individual will review you finances and assets and determine the how much you are able to pay off your debts and they will attempt to do so in a fair and even manner across all of your creditors. Paying off a creditor that holds the same weight or importance as your other creditors is considered a preferential transfer. In the even you did do this, the trustee may sue the creditor and reclaim the payment to redistribute it evenly amongst all of your creditors.
Using your credit cards to make purchases. If you are contemplating filing for bankruptcy then you should cease all use of your credit cards. First, additional purchases will only strengthen your dismal financial state and secondly, the newly incurred debt may not be discharged. Bankruptcy law states that any debt accrued under fraudulent pretenses will not be discharged. If your creditors can prove that you had no intention of repaying your debt when you made the charges, then the debt will stick with you after bankruptcy. Also, luxury chares that exceed $675 that are made within 90 days of bankruptcy are not discharged. A purchase is considered a luxury charge if the goods or services purchased do not reasonably promote your support or maintenance. Also, any cash advance exceeding $950 withdrawn within 70s are considered non-dischargeable.
Necessary purchases, like food or gas, should be conducted with a debit card or cash.
Transferring money or property to relatives. Filing for bankruptcy can bring up a lot of fears, the main one being losing your home, car, or other assets as a means to repay creditors. This fear is generally unfounded – most people are able to keep their assets after filing for bankruptcy so attempting to hide the assets by transferring them to family or friends is futile. The act of transferring property shortly before or during bankruptcy proceedings may be considered fraudulent concealment of assets by the court. If you are concerned about losing your property, contact our office for a free case evaluation; our expert bankruptcy attorneys will try to ensure no loss of assets befalls you during your bankruptcy case.
Depositing extra funds into your bank account. Many individuals will reach out to family in times of financial stress for a personal loan to pay bills or buy groceries. However, you should not deposit checks or cash from friends or family into your bank account. The only deposits you should have going into your account should be from sources of your income. You want to be able to clearly show how much money you have coming in and why it isn’t enough to clear your debts. If you own your own business, make sure that all incoming and outgoing payments for the business are conducted from a separate account. This will reduce the confusion of sorting through what is a personal or business charge.
Expecting future payments. Know that expected future payments such as those from a settlement, inheritance, or tax refund can and most likely will be confiscated by the bankruptcy court and used to settle your debts if any of it is still outstanding when the payments are received.
File a lawsuit. When you file for bankruptcy, you cannot be sued because all of your assets are transferred to bankruptcy court. This also means that lawsuits that you file against others can be affected by your bankruptcy, even if the litigation is currently in progress. Any amount that you are or will be awarded or settled can be seized by the bankruptcy court as an asset. There are some exceptions under Florida law; if you wish to see if you qualify for an exemption, schedule a free case evaluation with one of our bankruptcy attorneys to determine where your case stands.