The US Bankruptcy Code’s Title 11 governs all bankruptcy filings. However, what seems sensible according to the law does not always make sense in real life. The mistakes listed below can prevent one from maximizing the benefits of a bankruptcy filing, but a Bankruptcy Attorney St. Charles MO with Van Dillen & Flood P.C. can help clients avoid these errors.
Selling Assets to Try to Reduce Debt
The assets one can retain during bankruptcy are governed by state law and Bankruptcy Code exemption rules. In some cases, filers liquidate 401(k)s or sell off assets, but these measures rarely work. If a sell-off won’t get debt down to a manageable level, it makes no sense to sell assets which would be protected during a bankruptcy case. If one is struggling to pay their bills, that’s the right time to call a bankruptcy attorney.
Selling Assets Below Market Value
Another error common among bankruptcy filers is to hide or liquidate assets to prevent loss. A transfer before a bankruptcy filing must be disclosed in the petition, or a seizure may occur. Filers should consider that a Bankruptcy Attorney St. Charles MO can protect their assets in some cases; it’s not always about seizing them and giving them to creditors.
Preferential Repayments
It’s only natural to want to pay family members and associates first. However, during bankruptcy, paying acquaintances first can be regarded as insider transference. These transfers must be listed on a bankruptcy petition, and trustees can pursue the recipient for the funds if the transfer was made within a certain period before filing.
Intentionally Running Up More Debt
This happens in different ways. One can tap into credit sources, or they can convert unsecured debts into secured ones. When a person files for bankruptcy, they’re discharged of the duty to pay secured debts, but creditors can repossess or foreclose. If a filer maxes out credit cards, gets cash advances, takes a vacation or spends frivolously before bankruptcy, they may be guilty of fraud. Credit card issuers monitor transactions for abuse, and they can file an objection during bankruptcy proceedings. Such objections usually mean additional fees for a bankruptcy attorney in St. Charles MO, and, at worst, non-discharge of certain debts.
