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The period between deciding and actually filing for Raleigh bankruptcy is when most debtors are vulnerable to their creditors. During financial stress, it can be tempting to take all measures to alleviate the pressure. However, it is important that the debtor handles these financial issues carefully with a bankruptcy attorney to avoid major complications upon submitting a petition.
What Not to Do Before Filing for Bankruptcy
Financial mistakes, whether committed innocently or accidentally, can impede a bankruptcy case. This is why it is significant to address these issues immediately and avoid the following mistakes before filing for bankruptcy:
- Transferring Money or Property
Moving assets out of your name will not protect you from the reach of the bankruptcy court. A few examples of transfers that can get you into trouble are:
○ changing title of property under your name into the name of your spouse or child
○ eliminating your name as a business owner in a company
○ moving funds into another bank account under someone else’s name, among others
The worst-case scenario is these transfer records could be used as evidence for fraud. To determine the best way to deal with your assets, consult with a bankruptcy lawyer in Raleigh, NC right away. Filing for bankruptcy may protect your properties, depending on the type of bankruptcy you qualify for.
- Racking Up Credit Card Debt
Charging up your credit card before filing for bankruptcy may seem like an inviting proposition. However, racking up your credit limit with no intention of paying debt —especially when you are considering filing for bankruptcy— can be regarded as fraud.
The credit card company has the right to file a nondischargeability complaint in your bankruptcy case. If the court rules in favor of the credit card company, you will have to repay all your debts.
- Draining Retirement Account
A common mistake before filing for bankruptcy is withdrawing retirement funds to pay off a debt that bankruptcy could wipe out. Consult first with Weik, Raleigh bankruptcy attorney to ensure that you are not drained of essential resources. Bankruptcy can protect most of your retirement funds and put you into a much better financial situation.
- Paying Creditors
Many debtors would want to pay their unsecured creditors in full before filing for bankruptcy. Unsecured creditors refer to individuals or entities that lend money without obtaining specified assets as collateral.
Paying unsecured creditors prior to bankruptcy can lead to “clawback lawsuits,” wherein the bankruptcy court representative may sue the entity you paid to get the money back.
The bankruptcy trustee has the power to void preferential or fraudulent transfers made before filing for bankruptcy. The bankruptcy trustee also has the right to recover the money or property you used as payment for your unsecured creditors.
- Making Unusual Deposits into Your Bank Account
Refrain from depositing money into your bank account as a favor to others or using your personal account for business transactions. Depositing any money into your bank account that is not considered as salary or payment, can be considered as a fraudulent activity.
Be Knowledgeable Before Filing for Bankruptcy
Every cent counts when you are trying to get out of debt. This is why it pays to understand every detail before filing for bankruptcy to avoid major complications.
Eliminate your financial dilemma legally. Set up a time to speak with one of our caring professionals today to determine if you qualify for Chapter 13 or Chapter 7 bankruptcy. Call Weik Law Office now at 919-845-7877 for a free consultation.