Don’t Do This When Considering Filing Bankruptcy

When you face serious financial problems filing Bankruptcy may well  be a necessary and correct path for you. But caution is always required.  By consulting with a law firm that has years of experience with  Consumer Bankruptcy you can steer clear of some big pitfalls.

These are some of the serious DON’Ts to avoid when filing Chapter 7 or Chapter 13:

  • Don’t  transfer assets such as giving a car to a friend or relative. This can  cause severe problems if done without the advice of a lawyer. For a more  in depth discussion see this article.
  • Don’t  wait to file income tax returns for the last 4 years. Even if you owe  money, filing the return is essential or the taxes may never be  discharged.
  • Don’t repay debts to family and friends. If  it is a lot of money a Chapter 7 trustee can sue the friend or family  member causing a lot of heart ache. OK, if you owe $50 to Uncle Charlie.  Not OK to pay thousands or you are asking for trouble.
  • Don’t  do a short sale on your house to avoid a foreclosure. This can cause a  large income tax liability. For a more in depth discussion, click here.
  • Don’t  max out your credit cards and/or go on a spending spree. Incurring debt  just before filing a bankruptcy can cause problems you don’t need  including a denial of the discharge of some or all your debts.
  • Don’t  pay off a car loan. This can cause problems with the Illinois  exemptions. For a more in depth discussion on exemptions in Illinois  click here.
  • Don’t take money out of a retirement account to pay off debts.

Robert  J Adams & Associates is committed to helping our clients eliminate  debt and keep their house and cars. We are always on your side.

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