Personal Bankruptcy
We assist people with Chapter 7 and Chapter 13 bankruptcy filings at Weinberg & Associates. These are both personal bankruptcy proceedings. In many cases a person who owns and operates a business as a corporation or limited liability company can file for protection under a Chapter 7 or 13 bankruptcy proceeding. A complex corporate restructuring bankruptcy is normally filed as a Chapter 11 proceeding and we do not file Chapter 11 bankruptcies. You can call and speak with Steve or Morgan to determine if we can help you or if you will need to find an attorney who can help you file for Chapter 11 bankruptcy protection.Things You Should Not Do Before Filing Bankruptcy
Here is a list of common mistakes made by consumers prior to filing bankruptcy. These mistakes can results in significant financial detriment, so take the time now to learn what not to do before filing bankruptcy:
1. DO NOT TRANSFER PROPERTY OUT OF YOUR NAME!
Some people transfer property out of their names just prior to filing bankruptcy on the incorrect belief that if they do not own the property at the time of filing, the trustee will be unable to take it from them. This is not true. The trustee has a legal obligation to sue the the person who received the property to get it back and sell it anyway. This may be true for any property transferred within the 4 year period prior to filing. Gifts to friends or relatives will be treated this way as well.
2. DO NOT REPAY A RELATIVE OR AN INSIDER!
In the eyes of the law, a relative has no special legal status. Relatives and insiders are not to be treated any differently than other creditors within the same class. For example, if you receive a tax refund just prior to filing and give it all to your mother (or other relative) in repayment of a debt, the trustee can be expected to sue your mother (or other relative) to recover the money received and disburse it to all same-class creditors. Do not repay any debts to friends or relatives prior to filing a bankruptcy case. Insiders are friends, business partners, or other creditors with whom you have a special relationship.
3. DO NOT INCUR DEBT OR MAKE CHARGES YOU DO NOT INTEND TO REPAY!
Once you have made the decision to file bankruptcy, it is against the law to incur additional debt that you do not intend to repay because of the bankruptcy. In fact, it may be a crime. So, do not use your credit cards or incur debt you do not intend to repay once you have made your decision to file bankruptcy. You could lose the right to cancel the debt in bankruptcy, or worse.
4. DO NOT PULL MONEY FROM YOUR RETIREMENT ACCOUNT UNLESS YOU ABSOLUTELY NEED TO!
Funds in retirement accounts are protected in bankruptcy. You will be able to discharge debt in bankruptcy without giving up your retirement account, so do not take money out of it to pay debts. You are giving your money away unnecessarily and you will need those funds once you retire.
5. DO NOT TAKE BORROW AGAINST A LINE OF CREDIT OR TAKE OUT A SECOND MORTGAGE TO PAY DEBT!
Do not borrow against a line of credit secured with your home or take out a second mortgage to pay your debt. Some people believe that they must eliminate the equity in their homes in order to discharge debt in bankruptcy. This is not true in many cases. You make be putting your home at risk by increasing your mortgage debt. Consult with your attorney before you do this.
6. DO NOT ALLOW CREDITORS TO OBTAIN JUDGMENTS AGAINST YOU!
If there's a collection case pending against you in state or federal court, don't assume that you can avoid the court process simply because you've decided to file bankruptcy. Until your bankruptcy case is filed, a collection case continues and a judgment lien may be used to seize wages, bank accounts or can be attached to real estate that you own.
7. THE FAILURE TO TELL YOUR ATTORNEY THE TRUTH, THE WHOLE TRUTH AND NOTHING BUT THE TRUTH IS AN EXPENSIVE MISTAKE
Your attorney is your advocate. Your attorney can only provide advice based upon information provided by you. Failure to fully disclose your financial condition to your attorney can lead to the loss of those assets, denial of your bankruptcy case, fines, imprisonment, or all of the above.
Full Disclosure
The bankruptcy statute requires a full and open disclosure of your income, your assets, your debts, your creditors and several years of your financial history in the years leading to the bankruptcy filing.You may not keep certain assets "out of your bankruptcy." You must list the things you own and then you can propose how your assets will be treated through the bankruptcy. Failure to disclose important facts regarding your possessions, your debts and your financial can lead to dismissal of your bankruptcy case. Deliberate attempts to provide misleading information to the bankruptcy court could expose you to civil and criminal fines and prosecution.
Automatic Payments, Billing Issues and Banking
All of the creditors in the bankruptcy filing will receive notice of the bankruptcy shortly after the case is filed. Most creditors will stop billing you and taking automatic payments from your account once they receive notice of the filing. If you have an item that you want to keep that is paid by the creditor automatically pulling the payment from your account you may need to work with your bank to automatically push that payment to the creditor on the item you want to keep. You can also simply continuing making the payments on items you want to keep by sending a payment each month by mail, but that lead to another problem:Most of the creditors will stop sending bills to you once they receive notice of the bankruptcy filing. This can be a problem if you want to continue the payment on an item you want to keep and you are in the habit of sending the payment shortly after you receive the billing. In this situation you may need to mark your calendar and use an old billing statement with the account number and mailing address in order to keep making the payments on items that you want to keep. You should not stop making payments on items that you want to keep unless the attorney advises you specifically to stop the payments for some reason.
Some banks and credit unions will react to a bankruptcy filing by closing your account. This is a common practice for credit unions when they take a loss on a loan or credit card account. Banks and credit unions will sometimes take the unusual step of freezing accounts and requesting the Trustee or the Court's direction to allow a person to access the funds in bank accounts.
The filing of a bankruptcy is a significant financial event, it can provide financial relief but it is not an effortless process. Weinberg and Associates will work with you through the filing and bankruptcy process to reduce the impact on your life.
Here is a handout that you receive when you come in to sign your bankruptcy documents. This handout has a lot of basic information about types of bankruptcy, bankruptcy discharge, reaffirmations and more.
We help people file for bankruptcy relief under the bankruptcy code.