|Filing for bankruptcy can be a stressful time in your life. It is important to realize that you are not alone in filling your Bankruptcy and that there are certain things that you as a debtors must be aware of when filling. Few people realize that when you file for bankruptcy it can lead to long-term repercussions. That being said sometimes there is no other viable option and it is important to know about certain pitfalls which can be avoided when filing for bankruptcy. Below are some things to be aware of to avoid some of the pitfalls of bankruptcy.|
1. Transferring the asset value: When filing for bankruptcy many debtors want to get rid of all there debt but they do not want to give up any of there assets. So to protect there assets from the creditors they may transfer them to other people including family members and friends. This strategy can sometimes backfire and may not work when filling for bankruptcy. Recently transferred property and assets have to be disclosed to the bankruptcy trustee. Any assets that are transferred erroneously could be stopped by the courts and the courts could prevent the transfer from taking place. I caught transferring property without notifying the trustee could result in your bankruptcy being voided or rescinded by the trustee. there are specific guidelines of what assets are exempt in a Bankruptcy Info for the Schedule of exemptions for "Arizona these guidelines are specifically design to help you protect all or certain portions of a debtors assets while filing for a bankruptcy.
2. Transferring of credit card balances: Often times debtors attempt to transfer credit card balances prior to filling bankruptcy. This can shift the burden of debt from an older creditor to a new one and free up more credit to the debtor. This may allow the debtor more time to arrange for repayment of debt but the new creditor may strongly protest the debt and argue that the new debt should be presumed fraud, especially if the amount of debt is over $1500 dollars and the transfer date takes place within 60 days of filling bankruptcy it is best to avoid this practice as it may send up a red flag and leave the debtor open for more headaches.
3. Repayment of loans to family members: In the bankruptcy rules and guidelines The debtor is required to treat all creditors equally. The bankruptcy courts do not want you to choose to repay some creditors prior to others this includes family and friends. The trustee appointed by the bankruptcy courts holds the rights to pursue family and friends and receive some or all of the funds made available to them as a creditor. A debtor is required to list all debts owed to creditors this includes family and friends. and assuming there are no objections to the discharge of funds from other creditors then in some cases the debt can be officially redeemed the particular family member or friend or in any manner deemed fit by the debtor.
4. Avoiding certain debts while declaring the bankruptcy petition: As a debtor you are legally required to list out and clearly identify all debts outstanding at the time of filling your bankruptcy petition. If as a debtor you wish to retain any debts for things such as houses and automobiles when filling for chapter 7 bankruptcy protection, a debtor is required to sign a reaffirmation agreement with the bankruptcy court. A reaffirmation allows a debtor to continue paying a dischargeable debt after the bankruptcy. this is usually to keep collateral or mortgaged property that would otherwise be subject to repossession.
5. Ignoring litigations: Many debtors fear litigations and lawsuits when filling bankruptcy they may find it difficult to respond to summons in the mail. In many cases when the debtor has filled for bankruptcy and receives a summons there bankruptcy attorney can fax the case information to the creditors legal representative and get the litigation dismissed. I f the debtor has not filled for bankruptcy but is in the process of preparation it is best to attend the court hearing and ask for a continuance then file for bankruptcy relief