When you are in financial trouble, do not wait until the last minute to seek legal help. Some careful planning and working with a skilled bankruptcy lawyer can help you avoid certain pitfalls related to bankruptcy. Working ahead, at least several months before filing is often to your advantage.
Here are common errors that can get you into trouble or create problems:
Retirement account spending. To avoid bankruptcy, people often deplete their retirement accounts by using it to pay off debt. However, retirement accounts are generally exempt assets in a bankruptcy.
Maintaining large amounts of money in banking accounts. Trustees often take all the money in bank accounts to pay off creditors. Using your bank account to pay for daily living expenses and keeping very little in the account before filing bankruptcy prevents this from happening.
Credit card purchases. Credit card charges of more than $500 for luxury goods or services to a single creditor within 90 days of filing bankruptcy are non-dischargeable in bankruptcy [11 USC § 523 8(C)]
Cash advances. Cash advances adding up to more than $750 within 70 days before filing bankruptcy are non-dischargeable.
Debt payments to family and friends. The court reclaims any debts paid to family members within a year prior to filing bankruptcy or to creditors within 90 days of filing bankruptcy. Courts consider such payments as preference payments.
When you meet with a bankruptcy lawyer, disclose all the details of your financial situation so the attorney can advise your actions and help you avoid unnecessary penalties.
Harold Shepley & Associates is a Pennsylvania debt relief law firm that can help you plan bankruptcy or pursue other financial alternatives if more appropriate. Call 1-866-284-7062 or visit us at www.shepleylaw.com.