Jump to navigation Jump to content

Five Avoidable Mistakes When Considering Filing for Bankruptcy

Blog Category:
Comments (0)
Often times in the months leading up to filing for bankruptcy individuals try to rectify certain debts or take extreme measures to avoid filing for bankruptcy.  There are numerous things that people commonly do before filing for bankruptcy that may end up causing more problems in the long run.  Some of the most common pitfalls are as follows:
1. Do not take out additional mortgages on your house or loans on retirement accounts to pay off debts.  Often times people take out additional mortgages, which are secured loans, to pay off other unsecured loans like credit cards and medical debt.  This may have a few unwanted implications.  If you take out additional mortgages and are unable to make payments towards that the debt is then secured by your home and debtors may foreclose upon your house to recover the amount owed.  Once your house is foreclosed upon all of your legal rights to the house are lost permanently.  Even if your house is not foreclosed upon the debt which is now secured, and bankruptcy will not eliminate this debt.  At this point, if you wish to protect your house you will have to file a Chapter 13 bankruptcy, which does not modify the ongoing mortgage payments, but would allow you to catch up on arrearages over 48 months.
2. Do not make any payments to family members or friends in the year leading up to filing for bankruptcy.  This rule includes money given as a gift and money repaid, even when owed, to a friend or family member.  This would not include payment of rent if you live with a family member or friend.  The reason you should avoid these types of payments is that any payment made to a family member or friend in the year before filing is considered fraudulent by the Bankruptcy Code, without consideration of the actual merits.  This transfer can then be voided and the trustee may sue your family member or friend to recover the money which may lead to further issues.  While your bankruptcy would discharge the debt the the family member or friend you could certainly opt to voluntarily repay the debt after completion of the bankruptcy.
3.  Do not transfer personal property within the two years leading up to bankruptcy in an attempt to hide assets.  You will be asked about this type of transfer and either the trustee or the courts can avoid the transaction.
4. Do not attempt to pay off particular creditors before a bankruptcy.  If you make a payment of more than 600 dollars to any one creditor in the months leading up to bankruptcy the trustee may void that payment, sue the recipient, and recover that money.
5. Try not to cash out retirement accounts or IRA's unless you truly do not have any other options.  Many retirement accounts are protected by bankruptcy law.  This means that if you do not cash them out they are protected by bankruptcy and they will still be available in accordance with the terms of the account after filing.

If you are considering filing for bankruptcy you should speak with a St. Louis Bankruptcy Attorney as soon as possible.

Category: General

There are no comments.

Post a comment

Post a Comment to "Five Avoidable Mistakes When Considering Filing for Bankruptcy"

To reply to this message, enter your reply in the box labeled "Message", hit "Post Message."


Email:* (will not be published)


Notify me of follow-up comments via email.

For Current Clients

Our Locations

St. Charles Office

1861 Sherman Drive
St Charles, MO 63303
Phone: 636-916-5400

At Hwy 94 and Hwy 70.

Get Directions | See Detail

St. Louis Office

3470 Hampton Ave, Suite 101
St. Louis, MO 63109
Phone: 314-353-0834

Close to the corner of Hampton Ave and Chippewa. By appointment only.

Get Directions | See Detail

South & Jefferson County office

7321 S. Lindbergh Ave., Suite 222
St. Louis, MO 63125
Phone: 636-916-5400

Across the South County Mall.

Get Directions | See Detail

Florissant Office (North County)

1281 Graham Rd, Suite 300
Florissant, MO 63031
Phone: 314-921-1880

At North Hanley and Hwy 270.

Get Directions | See Detail

Belleville Office (St. Clair county)

2 Park Place Professional Centre
Belleville, Illinois 62226
Phone: 618-977-9560

On Hwy 159, next to Schnucks.

Get Directions

Granite City Office (Madison County)

3600 Nameoki Rd, Suite 201
Granite City, IL 62040
Phone: 618-977-9560

Across Shop'n Save, by appointment only.

Get Directions | See Detail

Follow Us On