How Not To File For Bankruptcy | Delancey Street
By | (0) Comment

How Not To File For Bankruptcy

If your financial situation is in such a bad shape that nothing short of filing for bankruptcy will help solve your problems, then you better not take too much time deciding to do it. One of the biggest mistakes people make is to defer the decision to file for bankruptcy. According to bankruptcy experts, people tend to wait until it is almost always too late to do anything at all and sometimes, people filing for bankruptcy don’t even have enough money to pay for the mandatory counseling sessions.

Then, there are the mistakes that people make prior to filing, which drastically affect their ability to get a “fresh start”. The most common such mistake is to use your credit cards. Why so? Well, you were probably unaware of these facts:

  • If you incur debts for the purchase of luxury goods and services from a single creditor in excess of $500.00 within 90 days of filing, this debt is nondischargeable and you may have to shell out the money.
  • Cash advances of more than $750.00 within 70 days of filing are presumed to be nondischargeable and may be found to be due and owing.

Another very common mistake people make is to repay the debts owed to family members. Remember: when it comes to repaying your debts, family members to whom you owe money are like any other creditors. A bankruptcy trustee can even reclaim any amount repaid to a family member within one year of filing bankruptcy.

Think you can reduce your debt burden and probably not have to file for bankruptcy. Good, so how do you plan to do it? Liquidate your retirement account? Don’t EVER make that mistake. Retirement accounts are generally protected. You can eliminate your debt and keep whatever you have in an ERISA qualified account, free and clear.

There are many more mistakes but the biggest one would be to not tell your attorney the truth. In a worst case scenario, failure to notify your attorney about your assets may even lead to the loss of those assets, denial of your bankruptcy case, fines, or even imprisonment.