You are eager to do something about your uncomfortable debt situation. You have been trying a variety of options to find debt relief and, while at times you were making progress, you no longer feel that way and you want to look at other options, including bankruptcy help.
You are impatient and thinking about what you can do before meeting with an attorney. So, you read up, you think of solutions, and you decide to take some action to show that you know what you are doing. After all, you want to protect your assets. You want to do something.
Our bankruptcy lawyers urge you though: please don’t do anything until speaking with a bankruptcy lawyer.
Below are some of the actions our bankruptcy clients have contemplated and, thank goodness, have generally not done as they could have hurt a lot more than they helped:
1. Transferring property, such as a house, car, or another major asset to a family member or friend.
Transferring items of value to someone shortly before you file for bankruptcy is considered fraudulent -- unless you have received the money equivalent for that asset. So, if you transfer your Ford Mustang GT to your son, he better have paid you the market value for that asset. If not, the Court will take the Mustang from your son, sell it, and use the money to pay off your creditors when you file.
2. Hiding money or assets.
If you file for bankruptcy, you must disclose all of your debts and assets. Hiding money under your mattress doesn’t mean you don’t have it, it just means it is under your mattress. You still have to disclose this in the bankruptcy law paperwork.
3. Using your charge cards or borrowing power for things you don’t need right before you file.
I have had clients say they have been advised to head to the stores or shop online to “max out” their cards shortly before they file for bankruptcy. This is not only highly unethical but it is against the law. In fact, your entire bankruptcy can be jeopardized, and you could still have to pay for the items anyway, so why take the risk?
4. Buy a new car or another major item just before filing, unless your attorney has approved it.
There are several reasons why you should not make any big purchases without your bankruptcy lawyer’s permission. One example is when people sometimes trade a vehicle that's worth less than they owe for a new one, they find they are strapped with not only the new car payment but also an amount that includes the balance on their old vehicle. When trying to consolidate debt, adding extra payments is not helpful.
There are circumstances when this is appropriate, such as when your car is dying and you need reliable transportation to get to work. Or maybe if you’re planning to give up your luxury vehicle with the high payment and get one with a much lower payment.
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The bottom line is, speak to your attorney before you make a move you might regret. Give us a call at 800-360-9392 to talk to a bankruptcy lawyer today.