If a person is considering filing for chapter 7 bankruptcy in Denton, TX, certain things can have negative effects on the case. It’s typically best to consult a lawyer, but before doing so, filers should take steps to avoid the mistakes listed below. Following these tips can help ensure that the case proceeds smoothly and help avoid challenges by trustees or creditors.
Don’t Transfer Assets
Many consumers believe that transferring assets to someone else will keep them safe. However, this simply isn’t true; such transfers could lead the court to determine that the filer has committed fraud. This may apply even if the transfer was done without the intent to hide assets. Some transfers to avoid include:
* Changing a car’s title to a spouse’s or child’s name.
* Changing names on bank accounts.
* Removing one’s name from business ventures.
* Depositing funds into others’ bank accounts.
* Titling real estate in someone else’s name, even if market value is paid.
Many people move assets out of their own names to avoid losing them during a bankruptcy case. However, having these assets doesn’t preclude someone from filing, and it doesn’t mean that they’ll lose everything. A lawyer can tell a client how to handle assets that may be exposed when bankruptcy is filed.
Don’t Make Payments to Creditors
Most people want to do the right thing by paying creditors off before filing for chapter 7 bankruptcy in Denton, TX. For instance, they may want to pay off a credit card or a car loan. However, these transactions are barred, as they’re considered preferential transfers. In some cases, claw back litigation may arise, where the trustee sues the person or entity to get the money returned.
Don’t Incur Any More Credit Card Debt
Unless it’s for necessities such as food, gas or housing, debtors should stop using credit cards. However, filers can still use debit cards that withdraw from their bank accounts.
Consider Waiting to File
Most of these mistakes can be avoided by delaying the filing. There are look-back periods for many actions, which means the court will only examine transactions completed within a certain time before filing. By putting off filing until such time has passed, filers can avoid many issues. For additional information or to schedule a consultation, call the Law Firm of David S. Kohm today.
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