Bankruptcy Important Tips
Important Tips for Your Bankruptcy Case
With all the material on this website about Bankruptcy, we wanted to create a simplified page for you, with some very important information that any person seriously considering bankruptcy should know.
Please be aware of the following issues:
- Waiting Too Long to Call a Bankruptcy Lawyer or File for Bankruptcy – We understand that filing for bankruptcy seems like a very difficult decision, one that you may even want to put off finalizing for now. However, time is critical and you should at least consult a bankruptcy attorney if you are behind on your bills. If you wait too long, creditors can seize certain property, freeze bank accounts or garnish your wages, all of which are things that could be prevented by a bankruptcy. By delaying, you may also unnecessarily exhaust valuable exempt assets like equity in your home or cash in your retirement accounts; while these are funds that would be protected in bankruptcy. Some people delay and wind up getting a second mortgage or equity line to pay off credit cards, only to later file for bankruptcy. That too is a huge mistake as those people are only converting an “unsecured” debt, capable of being wiped out in a bankruptcy, into a “secured” debt that cannot be discharged. Remember, by federal law, the minute you file for bankruptcy, foreclosures, law suits and any collection activity STOPS AUTOMATICALLY, except in those instances in which a person has had two cases dismissed in the prior year. Don’t wait until it’s too late to consult with a bankruptcy attorney about your situation.
- Ignoring Court Documents – Any letter, notice or court document you receive either from the court, sheriff or “process server” is important! One of the most common mistakes we see are people making bad situations worse by ignoring those documents. Sometimes viable legal defenses or options in court become useless after too much time passes. Do not give up your important legal rights by ignoring legal and court documents!
- Making Certain Pre-Bankruptcy Purchases and Cash Advances – Be careful how much money you spend on credit cards or take in the form of cash advances as there are presumptions of “abuse” that apply to these transactions. Currently, cash advances over $875 taken within 70 days prior to filing and purchases over $600 of non-essential or “luxury goods or services” made within 90 days prior to filing are considered bankruptcy “abuse” or fraud. Not only will you jeopardize your bankruptcy case but you also risk facing criminal penalties.
- Making Certain Pre-Bankruptcy Payments on Debt to Family Members or Other Creditors – Under the bankruptcy code, any payments for debts totaling over $600 to a family member within one year prior to filing for bankruptcy or to anyone else within 90 days prior to filing can be “avoided” and considered a “preferential transfer.” The person receiving those funds can be sued by the trustee to recover them.
- Making Pre-Bankruptcy Conversions – If you “convert” non-exempt assets into exempt assets within four years of a bankruptcy filing under Florida law, you can be sued to have the asset returned to the trustee. A “conversion” might include taking cash from a savings account and using it to pay down your mortgage or deposit into a protected retirement account. If you try to protect cash by buying a home, not only might this be considered a fraudulent conversion; there are also limitations on how much homestead protection is available on a house purchased within 1215 days prior to filing for bankruptcy. Speak to your bankruptcy attorney if you are contemplating any of these types of transactions.
- Making Post Filing Transfers – Once you file for bankruptcy, your property becomes part of a “bankruptcy estate” until the case is closed. The trustee’s duties include locating, safeguarding and in the case of a chapter 7, liquidating all non-exempt property in your estate. For a period of time prior to filing and after you file for bankruptcy, the trustee has power to be able to undo or “avoid” a transfer to keep non-exempt property that belongs in the estate for the bankruptcy. In certain circumstances, you may be able to transfer or sell exempt property if there is no objection made to the exemption within 30 days after you meet the bankruptcy trustee.
- Timing Your Filing Carefully If You Are Expecting a Tax Refund – In most instances, an income tax refund is not protected property but rather cash that could become part of the bankruptcy estate. If you are expecting an income tax return be sure to discuss this with your bankruptcy attorney.
- Worrying about the Effect Bankruptcy Will Have On Your Job - It is illegal for an employer to discriminate against you or terminate your employment because you have filed bankruptcy. Bankruptcy does not affect your professional licenses in Florida nor will it, in most cases, affect a security clearance.
- Listing ALL Creditors and Assets On All Forms That Require This Information – If you fail to list any creditor, even those you want to continue paying after bankruptcy, on the forms your attorney provides you and then subsequently that creditor is not listed in the petitions that you sign, that unlisted creditor will still have a valid claim against you after the bankruptcy. Not listing assets, even things like bank accounts with small amounts of money, penny stocks or minority interests you may have in a business, will most likely be considered fraud and subject you to criminal penalties.
- Reaffirming Unsecured Debt – In most instances unsecured debt will be discharged in a successful bankruptcy case. Sometimes creditors will contact you privately during your case in an attempt to get you to sign a “reaffirmation agreement” which would only make you contractually liable for a debt that would have been discharged in bankruptcy. If any creditors contact you about signing any agreement during your bankruptcy, be sure to contact your attorney immediately. There may be some instances where you will want to reaffirm unsecured debts but those are very rare.
- Filing a Suggestion of Bankruptcy in Any Other Pending Legal Matters – A Suggestion of Bankruptcy is a legal pleading that can be filed with the court in any other pending legal matter in order to temporarily stop that other legal proceeding until the bankruptcy case has been resolved. You want to be sure you notify the court of your bankruptcy, using this type of pleading, in any other pending cases where you are being sued. We can work with any lawyer you may have in another unrelated case to assist in creating and filing this important court document.
- Making Major Decisions – If you are struggling to keep up with your bills, contact a bankruptcy lawyer prior to making ANY major decisions. Getting married, buying a home, or starting a new career are all examples of decisions that may be greatly affected by a later bankruptcy filing.
If you or someone you know is behind on their bills and considering filing for bankruptcy, call or contact our bankruptcy lawyers today! Let the lawyers at the Law Offices of Evan M. Rosen, serve you.
More information on Bankruptcy in Florida:
- About Bankruptcy Fees
- Bankruptcy and My Credit
- Bankruptcy Deadlines and Timeline
- Chapter 7
- Chapter 13
- Ethical and Religious Concerns
- Fair Debt Collection Laws
- The 341 Creditor Meeting
- What Debt Can I Discharge
- What Property Can I Keep