Four Things You Should Not Do Before Filing For Bankruptcy
Martin Long • Jun 15, 2018
Failure to consult with an experienced bankruptcy attorney prior to filing for bankruptcy can result in costly mistakes. In fact, certain actions you take can cause serious problems for your case and may even be against the law.
Complying with the Bankruptcy Code
If you plan on filing for Chapter 7 or Chapter 13 bankruptcy in Denver, follow these tips to ensure you comply with the U.S. Bankruptcy Code:
- Avoid paying back family members: Some people feel that it’s better to give their tax refund to a family member instead of paying their debt. However, this is ill-advised for a few reasons. First of all, the trustee will take the money back to fulfill your debt. Secondly, you may be accused of fraudulent activity for engaging in “preferential treatment to an insider.” It’s a lose-lose situation.
- Hold off on luxury goods/vacations: If you’re accruing debt and heading towards bankruptcy, do not buy a new car or go on vacation. If you do splurge with your refund, the bankruptcy court may see you as dishonest and you may be charged with fraud. Also, if you purchase in excess of $675 in “luxury goods or services” from a single creditor within the 90-day period before you file for bankruptcy, there may be a claim of fraud and the debt is presumed nondischargeable.
- No cash advances : Do not take cash advances on your credit cards. Cash advances on a credit card aggregating more than $950 on or within 70 days of filing bankruptcy are presumed to be nondischargeable.
- Never conceal money: Hiding your money and not disclosing it during a bankruptcy proceeding is considered perjury and fraud. In addition to fines, you could face prison time.
- Do not transfer assets to another person: You may have heard that you can protect your assets by titling them under someone else’s name. This is absolutely false. Not only will doing this result in assets being seized, you could also face criminal charges for committing fraud.
Contact our skilled bankruptcy attorneys in Denver
The moral is simple. Be honest. Tell your attorney and the court everything about your finances and make sure your schedules are complete and accurate. If you find yourself overwhelmed by debt, bankruptcy may be the answer. With over thirty years of experience and a former bankruptcy court trustee, Long & Long in Denver can help you navigate the bankruptcy system, avoid pitfalls, and gain a fresh start.
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A joint petition is when a married couple together files a single bankruptcy case. Unless noted otherwise in the statutes, if a married couple files jointly in Colorado, each spouse may claim the full amount of each exemption. The favorable effect of this is that the couple can claim twice the amount of exemptions. Unmarried couples, partnerships, and corporations must file separate petitions. If you are an individual and have a business entity, such as an LLC or a partnership, you cannot file a single petition for yourself and that business. In such a case you will note your interest in your company in your individual filing, e.g., John Doe, a member of Doe, LLC. If you are a sole proprietor, however, you may include your 100% ownership of the business in your individual bankruptcy. Once a joint petition is filed, all property and debts between the two individuals in the marriage become part of the bankruptcy filing. Sometimes it may be advisable for one spouse to file a petition alone and without the other spouse. An example is when the debts are owed only by the filing spouse, and not the non-filing spouse. Though the non-filing spouse is not part of the bankruptcy, information regarding the income of the non-filing spouse must be included in the filing spouse’s statements and schedules. Why, you ask? Because the income from the non-filing spouse given for the benefit of the filing spouse may mean the filing spouse has the means to pay some of the debt. The Bankruptcy Process You can start the bankruptcy process by filing a petition with the bankruptcy court serving your area. In addition to the petition, you must also file with the court (1) schedules of assets and liabilities; (2) a schedule of current income and expenditures; (3) a statement of financial affairs; and (4) a schedule of executory contracts and unexpired leases. In addition, you must provide the assigned trustee with a copy of the tax return or returns for the most recent year as well as tax returns filed during the case. These documents must be provided for both husband and wife. Creditors Meeting Between 21 and 40 days after the filing date, the trustee will call a meeting of your creditors. In the case of a joint petition, both husband and wife must attend the creditors’ meeting and answer questions regarding their financial status and property. Within ten days of this meeting, the trustee will communicate to the court whether the case should be presumed to be an abuse under the "means test". Benefits Of Joint Bankruptcy Filing There are benefits to filing jointly. You will save on filing fees, as the fee is the same for both as it is for one. Filing jointly will often give the couple a greater chance of keeping their property because of the “doubling” of exemption amounts; However, in Colorado the homestead exemption amount is not doubled with a total maximum at the time of writing of $75,000, or $105,000 if 60 or over or disabled. In addition, joint filing will save the married couple a lot of time. Determining whether to file together or separately, whether to file for chapter 7 or chapter 13 bankruptcy, and ensuring the protection of as much of your property as possible is a complex process. Each couple’s situation is different, so it is important that a married couple considering a joint or individual petition consult an experienced Bankruptcy Attorney. As a former trustee for the U.S. Bankruptcy Court, with over thirty years experience, Attorney Martin Long is an expert in the industry with decades of experience in Colorado . We also serve Aurora, Centennial, Highlands Ranch, Denver, Lakewood, Englewood, Littleton, Castle Rock, Colorado and the Denver metro area with three convenient locations. For help with your financial matter, call the Law Office of Long & Long for a free initial consultation at 303-832-2655 .
