Important Tips About Filing Bankruptcy
This website contains a lot of detailed information on bankruptcy, and you should take some time to read those materials. However, we also wanted to provide people seriously considering bankruptcy with a simplified overview of some of the key points.
- Delaying too long to call a bankruptcy lawyer or file for bankruptcy: Because filing for bankruptcy can seem like a very hard decision, it is understandable that you might want to delay actually taking that step. But it is important to remember that timing plays a big role in bankruptcy. Creditors might be able to garnish your wages, seize some of your property, or freeze your accounts if you wait too long to file. All of those things might be avoidable by filing for bankruptcy in time. So you should at least talk with a bankruptcy attorney if you are having trouble paying your bills on time. Stalling could also result in your unnecessarily losing valuable assets like equity in your home or money in your retirement accounts. Some borrowers take out a home equity line of credit or get a second mortgage to pay off credit card debt, only to wind up filing for bankruptcy later. That is generally a big mistake, because it converts “unsecured” debt that can be discharged in bankruptcy into a “secured” debt that cannot be discharged. Keep in mind that the instant you file for bankruptcy the law automatically stops foreclosure actions, lawsuits, and any type of collection efforts, except where the person filing has already had two cases dismissed in the prior year. Talk to a qualified bankruptcy attorney before it’s too late.
- Ignoring important legal documents: Anything that comes from the court, sheriff, or a process server is important, whether it is a notice, letter, court document, or something else. Too often, we see people who make bad situations worse by ignoring these important documents. You can lose valuable legal defenses or options by just letting too much time pass. Do not forfeit your legal rights by sitting on important legal and court documents!
- Pre-bankruptcy cash advances and credit card purchases: Because presumptions of “abuse” apply to certain credit card purchases and cash advances, you need to be careful about how much you spend immediately before you file for bankruptcy. Current law considers the debt resulting from cash advances of more than $1,000 within seventy days before filing for bankruptcy, or purchases of non-essential or “luxury goods or services” within ninety days before filing as for more than $725 to be presumed to be “non-dischargeable” debts.
- Debt payments to relatives and other creditors before filing: If you make payments on debts totaling more than $600 to a family member within one year before you file for bankruptcy, or to any other creditor within ninety days before filing, the Bankruptcy Code allows for those payments to be “avoided” as a “preferential transfer.” The trustee can sue those parties to recover the payments.
- Conversions before you have filed: The “conversion” of non-exempt assets into exempt assets during the four-year period before you file for bankruptcy can result in a lawsuit to have the asset returned to the trustee, according to Florida law. Examples of a “conversion” include withdrawing money from savings to pay down your mortgage or make a deposit into a protected retirement account. Using cash to buy a home might be considered a fraudulent conversion, and the homestead exemption is also limited for a house bought within 1,215 days before a bankruptcy filing. If you are considering taking any of these steps, speak to a bankruptcy attorney first.
- Transfers after you have filed: What you own becomes a part of your “bankruptcy estate” from the time you file for bankruptcy until the case is over. The trustee is charged with locating and safeguarding the estate property, and liquidating all non-exempt property in chapter 7 cases. The trustee has the authority to undo or “avoid” any transfer for a period of time both before and after the filing date to retain non-exempt property that must remain in the estate for the bankruptcy process. In some cases, you might be able to transfer or sell exempt property if no one objects to the exemption within thirty days after your meeting with the trustee.
- Timing your filing carefully if you are expecting a tax refund: Bankruptcy law usually views an income tax refund as cash that could be considered as part of the bankruptcy estate, and not as protected property. Let your bankruptcy lawyer know if you are anticipating a tax refund.
- Concerns about job discrimination and bankruptcy: Certain employers and certain industries may have requirements regarding your filing for bankruptcy. However, if the federal government is your employer they absolutely cannot discriminate against you because you filed for bankruptcy. It is also important to keep in mind that bankruptcy has no effect on your Florida professional licenses, and it usually does not affect security clearances. However, some insurance company and banks take issue with employees who file bankruptcy. This is something you should discuss with a bankruptcy attorney.
- You must list ALL creditors and assets on the required forms: Failure to list any creditor—even ones that you intend to keep paying after bankruptcy—on the forms provided by your attorney and your signed petitions will most likely result in the unlisted creditor still having a valid claim against you after your bankruptcy. Also, it is likely to be considered fraud if you fail to list all of your assets, even minor ones like low-balance bank accounts, penny stocks, or minority interests in businesses. This could subject you to criminal penalties.
- Reaffirmation of unsecured debts: All unsecured debts are typically canceled in a successful bankruptcy case. However, some creditors will occasionally ask you to “reaffirm” a debt during your bankruptcy case. Such a “reaffirmation agreement” will make you contractually liable for a debt that you are legally entitled to discharge in bankruptcy. Talk to your bankruptcy attorney before you agree to sign any reaffirmation agreements. Although there are some rare cases where it might be advisable to reaffirm a debt, you are usually better off not doing it.
- Filing a suggestion of bankruptcy in any other pending legal matters: You can file a suggestion of bankruptcy with the court in any other pending legal matter to delay the legal proceeding until your bankruptcy case is over. You should use a suggestion of bankruptcy filing to notify the courts of your bankruptcy case in any other cases where you are being sued. The bankruptcy attorneys at the Law Offices of Evan M. Rosen can work with your lawyers in unrelated cases to help create and file this important document.
- Making major decisions: If you are having trouble paying your bills, do not make any major life decisions without first talking to a bankruptcy lawyer. Bankruptcy can impact a number of important life decisions like buying a home, getting married, or starting a new career.
If you or someone you know is behind on their bills and considering filing for bankruptcy, call our Florida bankruptcy lawyers today at (754) 400-5150 or contact us online. Our country’s history is filled with examples of people who have struggled financially but have gone on to become famously wealthy. They all reclaimed their part of the American Dream and we want to help you reclaim yours! Let the lawyers and staff at the Law Offices of Evan M. Rosen serve you!