A big mistake you should never do without proper legal advice before filing bankruptcy is transferring money or property out of your name. Sometimes such steps are advisable but they have to be correctly planned in advance. Such transfers are usually completely unnecessary anyway, since it very rare that clients lose property in a bankruptcy. The exemptions that exist to protect property in bankruptcy are generous.
1. Transferring Property or Money
One of the most common mistakes that people make during the initial stages of filing bankruptcy is attempting to move money or assets so that they go unseen. While it may seem like a good idea at the time, there are legal implications that could work against you. For example, the court could see your maneuver as attempting to conceal your assets so that you can retain them after the process is over. Keep in mind, having financial assets doesn’t mean you can’t file bankruptcy, and it doesn't mean that they will go against you during the assessment.
2. Paying Off Some Creditors, While Ignoring Others
Filing bankruptcy allows you to demonstrate that you have more debt than you can pay off. If you start whittling down your debt to preferred creditors before the paperwork even goes through, it could weaken your case in the courts. Preferential transfer of debt to target creditors could also lead to a ‘clawback lawsuit’ in which the bankruptcy trustee sues the creditor for preferential treatment. Keep making your payments as usual and balance them as best you can until the bankruptcy is complete.
3. Depositing Additional Funds into Your Bank Account
You need to be able to trace a routine standard source of income from your primary job or jobs. If you deposit additional funds from other sources outside of your work, the court may consider the income questionable. If you own business, then we strongly recommend that you keep your business accounts separate from your personal accounts.
Ron Lundquist Attorney at Law Can Help You with Your Bankruptcy
If you are considering filing a Chapter 7 or Chapter 13 bankruptcy, call the law offices of Ron Lundquist, Attorney at Law. I specialize in bankruptcy services, business bankruptcy, and foreclosure services. I can help you navigate through your bankruptcy while giving you sound legal advice so that it goes smoothly. For an initial consultation, contact me at 651-454-0007, or visit my contact page. I serve clients in Minneapolis and St. Paul areas, as well as the entire state of Minnesota.