Common Mistakes to Avoid When Filing for Bankruptcy

Doing These Things Can Jeopardize Your Rights

You’ve been struggling to keep your head above water financially, and you’ve finally concluded that your best path for moving forward is through a personal bankruptcy filing. It’s a difficult decision, but one that can help you get the relief you need and give you a fresh start. You need to be careful, though, that you don’t do certain things that might get you in trouble with the bankruptcy court or that come with a risk of limiting the effectiveness of your petition.

Don’t Try to Handle Your Bankruptcy Yourself

It can be tempting, when you’re in dire financial straits, to try to handle your bankruptcy filing without the assistance of counsel. You’ll find many of the forms online or otherwise available. But bankruptcy is a complex process. Without the guidance of an experienced bankruptcy attorney, you may not know whether to file under Chapter 7 or Chapter 13, what debts you can potentially discharge, or what assets you can keep.

Don’t Do Anything to Show Favoritism to Certain Creditors

If some of your debt is to friends or family members, it’s natural to want to keep them out of the bankruptcy proceeding. In most instances, though, you can’t do it. If you repay certain creditors within a specified time period before filing for bankruptcy, the payment will be considered “preferential,” and the court may demand that the payment be returned and put in the bankruptcy estate.

In addition, don’t give valuable assets to a friend or family member for “safekeeping” until your bankruptcy is final. You can sell assets to anyone, but you must do so at fair market value, and the proceeds must be used either for necessaries, such as food, clothing, and lodging, or must become part of the bankruptcy estate.

Don’t Run Up New Debt That You Plan to Discharge in Bankruptcy

Anything you buy within 75 days of filing typically carries a “presumption of abuse,” unless it can be shown to be for essential needs. While credit card debt is typically dischargeable in Chapter 7, it may not be if the charges were for luxury items. Furthermore, you may be charged with bankruptcy fraud.

Contact Attorney Howard N. Sobel

At the office of Howard N. Sobel, we provide personal bankruptcy counsel to people throughout the state of New Jersey. Contact our office online or call us at 856-424-6400 to set up a free initial consultation. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.

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