Episode 8: What NOT TO do before a Bankruptcy?
This is the ask a lawyer podcast episode 8.
What not to do before bankruptcy.
So we are here at Roxell Richards law firm.
We have another new attorney for you today.
This is Casey.
Actually Casey just got married.
What is your last?
Name Casey Smith
This is Mrs Casey Smith and she is one of our bankruptcy attorneys here at Roxell, which is law firm, so she’ll be giving us a little information.
I know a lot of people have been calling in about bankruptcy, and whether that’s right or wrong, choice for them and so today we’re going to talk about some things not to do before bankruptcy.
And we’re going to talk about that because we’ve been saying a couple of these things happen and we want to make sure that you have the best possible chance for a very smooth and.
Efficient bankruptcy, so we’re just going to start a little bit with that.
You got it.
Would you like to talk about anything specifically pops off top your head about what not to do before you have a bankruptcy?
Well, my one of the common mistakes that I see individuals make when they come into our office looking to follow bankruptcy is that they haven’t given us all of the all of their information in regards to their assets that they may have.
A lot of people like to keep it very general, but when dealing with the bankruptcy matter.
You really have to go into very great detail about every single thing that it is that you own, and this is really for.
Purposes of dealing with the Trustees office because any potential creditors you have out there, they want to be able to know what exactly it is that you have in order to be able to pay off your debts going forward.
So it’s very important and critical that individuals provide a lot of detail on every you know everything they have.
Anything they potentially may have forgotten about, so you have to really get very personal with your attorneys and let us know what it is that you have so that we can move forward with your case and not.
Have an automatic dismissal.
OK, nobody wants automatic dismissal ’cause that would that would be not cool.
What about I know that we recently had a client that decided he wasn’t going to follow any income tax.
So what about?
That is, that something that might set us off, or I mean we don’t even, I don’t.
Know how that went?
Can you tell us how would that work?
Well, of course.
We can’t give out too much information, but just generally speaking, you know, even if you haven’t filed taxes in the past, you can still file.
Your returns later and end up being OK in your bankruptcy matter.
The main thing is that you.
Uh, you have to file your returns because failing to file tax returns again is another thing that will get you an automatic dismissal without them even looking at anything else that you filed, because without filing those returns they’re not going to be able to see exactly what income you have what.
You know expenses you have, so they really need that.
Information to be able to assess all of your assets, as well as whether you may owe the government money and have some additional you know in the IRS, may actually be an additional creditor that you would actually owe money too.
Interesting enough, now what if I want to?
I know I already know I’m going to file bankruptcy.
I’m already, you know, doing poorly and I’m just gonna go and Max out on my credit cards and just run up a bunch of dead ’cause I Know I’m going to.
Bankruptcy anyway, and I’m not going to pay it off.
Will that work?
Can I do that?
Well, of course you could do it, but you should not do it.
Mainly because if you start racking up new debt then your creditors are going to say things like, well, you brought on this new debt.
And obviously you didn’t have any intention to ever pay it because you already knew that you were in a bad position financially.
And that you were getting ready to file for bankruptcy.
So it really just shows ill will and intention on your part and is another one of those things.
That could potentially lead to automatic dismissal or.
Having those creditors essentially ask that that that their debt to be paid off initially and not be discharged in your bankruptcy, and they’re kind of looking at things that you may do with your credit within like a 70 to 90 days.
Period prior to your filing for bankruptcy and one thing I think we forgot to mention earlier is that you know there are different types of bankruptcies so.
You know, in the Chapter 7 is when we’re talking about actually discharging your debt, so doing something like racking up new debt could greatly affect a discharge, and they may require that you actually convert your bankruptcy to a Chapter 13, where that is a matter of refinancing your debts as opposed to discharging them.
OK, what if I know I’m going to do bankruptcy and I decided I’m going to move all my stuff and put it in my mom’s name and put it in my husband’s name? Could they go after them or because there’s something you do on that part?
Uhm, I wouldn’t say necessarily that they.
Will go after.
Your family members, but again, it’s a matter of having that kind of ill will and intent of you know if you start randomly moving assets right before you file for bankruptcy that looks, you know, it just raises a lot of red flags.
And of course there may be.
Instances where you may have had some sales and property in order.
To pay off some of your debts on your own without filing for bankruptcy and the instance like that, you know that’s not necessarily a bad reflection on you, but if you do start kind of moving assets around, changing stuff to other people names, you know all of these are things that can automatically get you a dismissed.
Without a second loop.
OK, that’s understandable.
What if I already know I’m gonna get like a big inheritance or a trust is about to come into the timing and I’m going to be able to have access to it, but I really need to follow bankruptcy like right now, but I’m going to have some money coming up later.
Can they use that money?
Is that gonna hot bother things in the future?
What should I do in that?
Well, in that situation you should really consider whether you absolutely have to file the bankruptcy right now, because if you know for sure that you’re gonna have this large amount of money coming in, then it may be a better option for you to try and speak with your creditors directly and see what kind of you know payment plan you could possibly work.
It would have.
Without having to go through the bankruptcy procedure.
And additionally you.
Also want to keep in mind.
Though if you.
Do decide to go ahead and file the bankruptcy that you do have a duty to not hide any assets.
So it kind of goes back to the first point we talked about with being being truthful and providing Full disclosure.
These office so if you do decide to go ahead and file, even knowing that you’re going to get this large sum of money, you would absolutely have to disclose that to the trustees office.
And then yes, of course those finances will be placed, you know, within the bankruptcy proceeding, and your creditors could ask to be paid on those.
Amount as well.
OK, now what if I didn’t listen to any of this and I’ve already did all of this?
Is there anything that you can do or what options do I have in that instance?
Well, in that instance it kind of goes back to what I mentioned before about there being different types of bankruptcies that you can file.
There’s actually three types.
There’s the Chapter 7 or chapter 13 and Chapter 11.
For purposes of this episode, we’ve really only talked about 7 and 13 because that deals with individuals, whereas a Chapter 11.
Deals with businesses looking to file for bankruptcy, but if you’ve already done some of these things, the first thing you may want to do, or you should.
Do is consider which type of bankruptcy you’re actually looking to file for, because as I previously mentioned, under a Chapter 7 it will allow you to actually discharge.
Uhm, your discharge your debts, whereas a chapter 13 is just a refinancing of your debts.
So if you’ve done some of these things already, you may want to consider converting your Chapter 7 to a chapter 13 just to show that you do have intent and that you’re trying to pay off your creditors.
Because in such an instance it may be something that the courts will do for you.
So if you’ve already done some of these things and you decide to still file a Chapter 7, then they may automatically convert your case to a 13.
This has all been really, really great information.
If someone is out there that is looking to file bankruptcy or looking for guidance and whether or not they spelled Magnuson, they want to find you.
Where can they find you Mrs. Smith?
Well, they can find me on Roxell Richards law firm website.
All of my information is posted there.
I can be reached via telephone or email.
And that is Roxell Richards roxellrichards.com. This has been episode 8.
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