More Bankruptcy Mistakes

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1. Transferring property out of your name


A bankruptcy trustee (the person who reviews bankruptcy cases) can reverse a transfer of property that previously belonged to you if the transfer was made within the last four years with the intent to delay or defraud a creditor. They can even do it even if simply a fair price was not received. Don’t be cute!

2. Line of credit/second mortgage to pay off credit cards

Don’t take a loan against your real estate in an effort to reduce the equity to pay off your debts. You can often file bankruptcy and not lose this valuable asset. If you take out a second mortgage to pay credit card debt, you may be putting your house at risk.

3. Failing to appear in court

You can’t avoid a lawsuit simply because you’ve decided to file bankruptcy. A collection case continues until your bankruptcy case is actually filed, which occurs only after the fees have been paid and you have provided your attorney with ALL the information needed. Retaining an attorney to file bankruptcy is an important first step, but it isn’t the end!    

Some of the more common bankrutpcy mistakes

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1. Paying back Uncle Joey

Yes, I know he's the godfather to your children, but the law prohibits you from treating family better than your other creditors. In fact, a bankruptcy trustee can reclaim (go after) any amount repaid to a family member within one year of filing bankruptcy. [c1]

2. The credit card run up mistake

Running up your cards once you decide to file...Charges for luxury goods and services owed to a single creditor, totaling to more than $500 within 90 days of filing, are usally not covered under a bankruptcy and you will have to pay them. Ditto on cash advances totaling more than $750 for all creditors within70 days of filing. Don't jeopardize your fresh start by running up your credit cards.

3. Using retirement $$$ to pay debts

You worked hard to save in that 401k don't drain their retirement accounts in a futile attempt to pay down credit card debt! Retirement accounts are generally protected (you get to keep them) when you file bankruptcy.