2/6/2012 9:55 AM ET|
Filing for bankruptcy? 12 missteps
If you're looking to make a new start, be sure you do it the right way. These moves could cause trouble.
Many people find themselves in financial turmoil and finally decide that enough is enough; it's time to file for bankruptcy. The goal is for a fresh start from the monthly burden of trying to pay bills when there is not enough income to do so.
Bankruptcy happens. When it happens to you, try to avoid the following 12 common mistakes:
The vast majority of people who file for bankruptcy protection do qualify. Those who don't will generally have other options available to them. Deciding to file anyway -- despite not qualifying -- by leaving out assets or income could result in the case being dismissed and the filer being barred from filing on those particular debts ever again.
2. Leaving out income
People think that a second, part-time job does not count as income. All household income must be included, even the $300 per month your son earns working part time while in school. If you claim him as a dependent in your bankruptcy, you must include his income.
3. Leaving out cars
Some people say, "I don't want to lose my car. Why are you listing it in the paperwork?" The car is an asset (or a liability if it is secured by a loan). It must be listed, and the court-appointed trustee reviewing your case must know about every car you own. Even a car driven by your son, which wasn't transferred into his name, must be listed. And don't transfer it to him just before filing. That's the best way to lose it.
4. Leaving out car loans
You must notify all your creditors, even car lenders, that you have filed bankruptcy. You can usually keep the car, but the lender may have specific requirements you must follow. Failure to notify the lender may result in the loss of the car.
5. Leaving out creditors
Most credit card companies centralize the processing of credit card payments and services. Card companies will know that you filed for bankruptcy protection even if you don't have a balance on that particular card. So don't try to hide a credit card when you file for bankruptcy. You can get new credit after the bankruptcy. It is not worth it to leave out any creditor.
There is one big exception to this rule, and it pertains to credit unions. You may be able to keep an account with a credit union after filing for bankruptcy. Discuss this option with the credit union before filing.
6. Transferring assets out of your name before filing
Transferring an asset before filing for the purpose of protecting that asset is illegal. Just because you have an asset you want to protect does not mean you can give it away. A competent bankruptcy attorney can discuss how to legally protect an asset that might otherwise be at risk.
7. Repaying family before filing
You may owe your mother $10,000 and have every intention of paying her back. Just don't pay her back in the 12 months before you file. No matter what you think, she is still a creditor, like your department store or the bank that issued your credit card. The bankruptcy code looks harshly on payments made to family members before a filing. Know the rules concerning payment to creditors before filing your case.
8. Failing to list all potential or pending lawsuits you have against anyone
Suing your former employer for unpaid wages? Suing your former best friend for unpaid rent? Those are assets and must be listed as such in your bankruptcy paperwork. You may be able to continue with the case, but the court-appointed trustee must know about those claims or potential claims.
You may even lose the right to continue with a potential lawsuit because the court-appointed trustee might be interested in taking over your lawsuit on your behalf. The lawsuit becomes an asset in your bankruptcy case and may have significant value. This is a complicated topic, but failing to list potential or pending lawsuits is a common mistake made by bankruptcy filers.
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This past week I was watching Bloomberg TV with Betty liu she is great. She was interviewing a guy Tom Brown, Chief Executive Officer. Second Curve Capital, LLC. He was explaining how he felt about the foreclosures when he all the sudden say's something like all people in foreclosure are low life’s. I got really pissed. Goes to show how some of the rich people really feel about us regular American and it was us who made him rich. I would never of thought I would ever hear another American call us LOW LIFES. I saw the face on Betty Liu and she wasn’t happy with that comment. WOW sad day in America.
It was a 8 million Dollar business that was reduced to 2.8 within 3 yrs. I still have nothing to speak of. Everything that was built over a 20 yr period is gone except for the house for my family to live in.
I HAD to file back in 2000, I got hurt on my job they wouldn't pay me I did win later. I also had to have 2 plates and screws w/cadaver to fuse my neck only after I had that surgery my job believed me. But the he!! they put me through for 2 years and then my car had been repo'ed, my dog died (I couldn't pay for treatment for him), my Mom died, had to find the money to take care of that (my sibs didn't help either).
I almost lost my house if I hadn't been getting some money from A.F.L.A.C. My job would have starved me back to work, pain and all....I ended up killing the bankruptcy after my Lawyer got my job to pay me my back money and S.S.D. also paid me too. I don't know how I would have made otherwise. I had to file a Ch.13 because I had some assets and equity in my home, then I got hit with a crap load of medical bills of which I sent to my job they didn't want to pay either but again my Lawyer made them pay.
I ended up fully able to go back to work in '02' and got hurt again and had to get back on the Merry-go-Round again. But my job didn't want to play so they paid me again and gave me my Pension w/full bennies too. I moved out of State bought a house w/that settlement money and that house will be PAID for by June of this year. I am also doing what the Goverment can't do....Live within my means and NO MORE LOANS either it's a cash deal from now on.
It is not reasonable to think all people who file for bankruptcy are dead beats. Many people have lost their jobs and medical and with the devalation of their homes most or all of their wealth has dissapperared.Lets not judge everyone based on the bad ones. By the way I have no personal debt and no issues so my comment is not a biased one.
As a business owner I have come close many times to not having enough to pay the monthlies due to non or slow payment by customers including government contracts and one could easily have defaulted at the bank but I managed to get through and feed 20 families. If I had failed how would that make me dead beat (someone diditonce)
Maybe it was you or your government department that did not pay me.
To all those self righteous, pompous a$$es out there Chapter 7 is the only way if due to the economy your wife loses her job and income is cut by half. She is still out of work. It has been 4 years now and still no job.
this message is for The fosz,
It is not the end, i had a bankrupts and bought a house with no money down 7 years after. Prior to buying my wife bought the house on her own during the seven years. 3-year after the purchase I dumped the upside down house, we saved money by not paying the monthly bill while living in a small apartment and my wife bought a house under her name within a year putting down only 5%.
Only in america, we got a 2500 sq ft house, upscale area in charlotte nc for $169,000, short sale.
We are now saving for the next disaster, and I will buy the house.
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