Thinking About Bankruptcy? A List Of Dont's Pt. 2
Don't repay family members. The thing is that they can't be treated different than other creditors. Under the law, relatives have the same exact legal status as every other creditor that you owe. Thus, relatives can't be treated differently than all of the other places. I know that stinks, however it's the law.
Don't liquidate your retirement account! They are generally exempt property under the law regardless of what chapter you file, so it's unnecessary to do this. Some people liquidate and still owe giant amounts of debt, and if you withdraw these funds early that means you are liable for taxes and penalties which might not be discharged in the bankruptcy.
Do not transfer property out of your name before you file for bankruptcy. This action can be undone if a fair price is not received, or if it were made with intentions to defraud, delay, or hinder a creditor. Friends and relatives also fall into this category.
Don't use your equity line of credit to pay off your debts. Under most federal and state laws, you do have the option to claim exemption for the your home equity. That way, you can go through bankruptcy and still be able to have this equity.
So in a nut shell, if you utilize your equity line to pay off debt or take out a second mortgage, you will pretty much be converting debt that would have been discharged in bankruptcy into debt which you will still need to pay so you can keep your house.
And one last do: Always speak to your attorney with honesty and make them fully aware of all of your concerns. Courts take their rules seriously and have the ability to file criminal charges if intention fraud is committed. And even if they don't go that far, they can refuse to discharge a particular debt, or simply dismiss the entire case.
Don't liquidate your retirement account! They are generally exempt property under the law regardless of what chapter you file, so it's unnecessary to do this. Some people liquidate and still owe giant amounts of debt, and if you withdraw these funds early that means you are liable for taxes and penalties which might not be discharged in the bankruptcy.
Do not transfer property out of your name before you file for bankruptcy. This action can be undone if a fair price is not received, or if it were made with intentions to defraud, delay, or hinder a creditor. Friends and relatives also fall into this category.
Don't use your equity line of credit to pay off your debts. Under most federal and state laws, you do have the option to claim exemption for the your home equity. That way, you can go through bankruptcy and still be able to have this equity.
So in a nut shell, if you utilize your equity line to pay off debt or take out a second mortgage, you will pretty much be converting debt that would have been discharged in bankruptcy into debt which you will still need to pay so you can keep your house.
And one last do: Always speak to your attorney with honesty and make them fully aware of all of your concerns. Courts take their rules seriously and have the ability to file criminal charges if intention fraud is committed. And even if they don't go that far, they can refuse to discharge a particular debt, or simply dismiss the entire case.
About the Author:
Mallory McGuinness works for a debt collection company. Also, she writes pieces on business and finance, the credit industry, and collection agencies
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