Bankruptcy is a legal process through which businesses (entities) and individuals who cannot pay debts to their creditors seek relief from some if not all of their debts. In other words, it’s mainly designed to help businesses and individuals eliminate part or all of their debts to help them pay a certain portion of what they owe.
Straight bankruptcy or Chapter 7 Bankruptcy comes into most people’s minds when considering filing for bankruptcy. Under this type of bankruptcy, the federal law trustee is allowed to supervise any sale of assets that aren’t exempt.
Bankruptcy has long-term effects; it will remain on your credit for about 7-10 years. This can affect your ability to open a credit card account. Moreover, you’ll not be able to be approved for loans at favorable interest rates.
Here are four things to avoid before filing for Chapter 7 Bankruptcy.
1. Avoid Filing Bankruptcy if You’ll Receive Future Payments
The amount of money you are expecting to receive in the future will be considered part of the bankruptcy estate. And as such, you should avoid any of those payments. If you are filing for straight bankruptcy, the Chapter 7 trustees will use this sum of money to repay your unsecured creditors.
2. Avoid Asset Transfers Before Filing
Most individuals may think of transferring assets to their loved one or family member’s bank account to protect them against bankruptcy. However, transferring assets from your name won’t protect you from the reach of bankruptcy trustees.
In some cases, the bankruptcy court may declare you as committing bankruptcy fraud even if you had no intentions of concealing the assets.
Examples of transfers that can land you in trouble include:
• Taking off your name from a business venture.
• Removing or depositing money into the bank account belonging to others.
• Changing your title into the name of your spouse or child.
Among the many reasons why individuals remove their properties from their name is due to fear of losing them.
3. Avoid Depositing Unusual Amounts Before Filing
You will not want to deposit money into your account that is not considered payment or salary. And as such, individuals should avoid using personal accounts for conducting company transactions as they’ll have difficulties proving that the money isn’t theirs. In addition, this may cause a problem with one’s ability to succeed in the mean test and be eligible for straight bankruptcy.
4. Avoid Favoring Credits
Most if not all consumers may want to pay certain creditors fully before filing. They may want to ensure that these people get full payments. However, such transactions are against bankruptcy law.
Talk to a Bankruptcy Attorney
Consulting with a bankruptcy attorney before filing can help you understand hidden dangers and thus avoid mistakes. Some bankruptcy attorneys may charge consultation fees. However, the attorneys at Fair Fee Legal Service offer free consultations on the bankruptcy filing.
8665 South Eastern Avenue, Suite 101 Las Vegas, NV 89123