A massive mistake that you can take on as your filing for bankruptcy is the process of making major financial decisions. Working to transfer the ownership of your assets and transferring money can make a big difference when it comes to your bankruptcy proceedings. Sometimes these steps can be advisable if they are planned in advance but if you take action without the advice of your lawyer, you could end up losing some of your assets or potentially discrediting yourself from the form of bankruptcy that you’ve chosen. There are exemptions that exist in bankruptcy that are typically quite generous and making unnecessary moves with your finances can put you at risk. Here are some of the top mistakes that people make during a bankruptcy that can cause them to lose extra money in the process:
Transferring Money or Property
A common mistake that many people make during the early stages of their bankruptcy is attempting to move their assets or money to make sure that the assets can be properly hidden. It might seem like an excellent idea at the time to try and hide your assets but there are a series of legal implications that can work against your case for bankruptcy. The courts can very quickly see the maneuver that you are making and you might be seen as someone that’s concealing their assets so that you can retain more of your assets after the bankruptcy process is over. Having the financial assets will mean that you can’t file for bankruptcy but these could be items that are included as potential sales targets for recouping the debts you owe.
Selectively Paying off Creditors
Filing for bankruptcy allows you to demonstrate that you have more debts than you’ll be able to stay on top of but if you’ve begun to whittle down debt with preferred creditors before the paperwork is going through, this can weaken your case for bankruptcy. Preferential treatment on certain debts could lead to creditors delivering a clawback lawsuit in which a trustee will sue the creditor for the preferential treatment that they’ve made with one particular debt. Make your payments as usual and pay the balance as best you can across all of your debts to make sure you can complete your agreement.
Depositing Extra Funds Into Your Account
You need to have a standard source of income from your primary job that is used to pay back creditors. If you have any other income coming in from outside sources of work it’s likely that the court may consider this to be a questionable form of income. If you’re owning your own business we would recommend that you keep a business account separate from any personal account. Do be able to pay off your creditors through the business and there won’t be as much ongoing scrutiny for your personal finances if you happened to get extra funds in your account. Keeping separate accounts will make it easier for your creditors to track the process of your plan.
If you’re considering a process of filing for bankruptcy and you would like someone on your side throughout the preparation and early filing process, we are a team that can assist you. Our staff is ready to help you navigate your way through bankruptcy and give you the legal advice that is required to help you navigate bankruptcy more smoothly. We have years of experience as bankruptcy attorneys and we are ready to help you keep your assets safe with expert advice and as your negotiators. Contact us today to set up a free consultation.