If you are considering bankruptcy and have concluded that bankruptcy is the only way to breathe some life back into your financial situation, it is important for you to be aware of certain things that can be detrimental to your bankruptcy case. The bankruptcy process is not an easy process by any means, but there are some Do’s and Don’ts that could mean a smoother bankruptcy process for you.
Be Transparent with you Bankruptcy Attorney
IIf you ask any attorney, the attorney-client relationship is a sacred relationship based on mutual trust and confidentiality. Attorneys take an oath to represent a client’s best interest, but how can your bankruptcy attorney do so if you withhold information from him or her? Here’s the truth: the bankruptcy petition that is filed with the court is a legal document that is signed under penalty of perjury. Any information pertaining to your financial condition (whether you fail to include certain assets or omit certain creditors) that is left out or omitted, can be construed as bankruptcy fraud and can lead to a denial of your discharge. Think of reality TV star Teresa Giudice and her husband, Joe Giudice. They were convicted of concealing assets and income in their bankruptcy case, and served time in federal prison for bankruptcy fraud. The Guidices sued their attorney for malpractice and negligent representation, but there is no way to know the real story: Did Teresa and Joe intentionally commit perjury or were they inadequately represented by their bankruptcy counsel? Save yourself the trouble and be truthful with your bankruptcy attorney.
Don’t Transfer Property Prior to Filing
People have a misconception that if you have assets (such as cars, a home, cash, or money in your bank account) you run the risk of losing these assets if you file for bankruptcy. As a response, many who are looking to file for bankruptcy feel that it is necessary for them to transfer their ownership interests in these assets to other people in order to protect those assets. The reality is that transferring assets prior to filing for bankruptcy does nothing to protect your assets. In fact, these transfers raise flags and lead to an unwanted investigation into all of your previous financial dealings (even if you had no intention to conceal these assets). The Bankruptcy Code provides exemptions that allows people in bankruptcy to protect a certain amount of equity in real and personal property. In most cases, all of your personal property will be protected, but if there is equity in property that can’t be fully protected, It is not the end of the world because you may still have options that you can discuss with your bankruptcy attorney. Therefore, transferring property in order to protect your assets from creditors is completely unnecessary and can detrimental to your bankruptcy case.
Don’t Max Out the Credit Cards
Most clients ask the same question: Will I get in trouble if I max out or take out a cash advance on my credit card(s), and then file for bankruptcy right after? If you have to ask yourself this question – more than likely – you already know the answer: Does it pass the smell test to you? I get it – its human nature to walk that fine line between following the rules and slightly “bending” them. However, you must remember that ignorance, for the most part, is not a defense. When you consider bankruptcy, the first thing that any attorney will recommend is to stop using your credit cards. You may use your credit cards for necessities, such as housing and food, but avoid this practice if you can afford to. This is because the purchase of any ‘luxury’ item at least 90 days prior to filing for bankruptcy may be construed as obtaining credit through fraudulent means, and the debt can be deemed nondischargeable. To put it in layman’s terms: the credit card company will file a complaint against you in bankruptcy court, and if successful, you will be liable to pay back the debt in full.
Don’t Go Cheap on a Bankruptcy Attorney
Think of bankruptcy like a major surgery: would you try to find the cheapest surgeon? More than likely NOT. When choosing a bankruptcy attorney, cheaper options usually translate to either lack of experience or cutting corners. The bankruptcy process is a very tedious and difficult process (even more so for someone that has little to no bankruptcy experience). The same thing goes for attempting to do it yourself. Bankruptcy is a specialized area of practice that requires a lot of time, focus, and years of experience. Save yourself the time and stress - just hire an attorney. What you should focus on is experience and reputation. Trust me, a little bit of research to find the right attorney with years of experience and a great reputation within the community can mean a smoother bankruptcy process in the end.
A Bankruptcy lawyer should be able to educate you on all the options, listen to you carefully so he or she understands your situation, and then be committed to ensuring that you know what is happening every step of the way. This is how you measure experience and reputation. At Scura, Wigfield, Heyer, Stevens & Cammarota, LLP, it is our goal to make sure that when you leave our offices you feel better than you did when you walked in. We know that filing for bankruptcy is disruptive and difficult, and the representation you choose to help you navigate through this difficult decision can make all the difference in the world as to how things turn out. We are committed to helping you solve today’s challenges in a way that best sets you and your family up for a successful future. Call for a free consultation and let our experienced attorneys guide you to the right path.
