The Port Law Firm, located in Florida, has the following advice for those considering bankruptcy. If you are a Floridian facing financial difficulty, and bankruptcy seems to be in your future, there are several things you should not do. Avoiding these actions right now will help you during your bankruptcy process. While filing for bankruptcy is an unpleasant last resort, you can take measures to make the process less painful.
Asset Transfer
It may seem like a good idea to you if you are facing bankruptcy to sign your assets over to a trusted friend or family member. You may reason you can protect these items from being taken by creditors, but it is important to realize the court has the ability to void this transfer on behalf of the creditor. The transfer will have made no difference because once it has been reversed, it is available to the courts.
Refinance Your Mortgage
Florida homeowners who have owned their homes for more than 1215 days or who have less than $136,000 in equity in the home have a property that is fully protected from creditors. If you refinance your home, you put yourself at greater risk because if a default occurs regarding this refinanced mortgage, you run the risk of foreclosure. Creditors from credit card companies cannot force a foreclosure on a home. If bankruptcy is in your future, there is no sense in refinancing to pay credit card debt.
Exercise Those Credit Cards
Once you have filed for bankruptcy, the court reviews your debt and when it was incurred. If they believe you abused your credit cards right before filing, the court may deny you a discharge. This means you will still be responsible for paying back your debts. If you plan a shopping spree in anticipation of a bankruptcy filing, it is considered fraud. This does not apply in situations where you incurred debt you could afford and then an unexpected event like a medical emergency occurred. However, if the court believes you behaved irresponsibly immediately before filing bankruptcy, it can damage your chances of fixing your problems with a filing.
Deplete Your Retirement Fund
It may seem like a great idea to pull money from your retirement savings to pay your debts. While this may work for some people, it is important to review your personal situation with a professional. Using your retirement fund to pay your debt may not leave you in a better financial position. Working with a law firm like The Port Law Firm can help you make the right decisions concerning your debt and retirement situation.
Money Transfers to Family
Like asset transfer, transferring or paying back loans from family members will do you no good right before filing bankruptcy. If the money has been transferred within a year of filing, the courts can sue your relative to get access to that money. Not only will you have accomplished nothing, you will have created problems for your family member.
Pay Off Your Car Loan
Car owners in Florida are only protected up to $1,000 of the equity in their vehicle. This means if you own your car outright, a creditor can force you to sell it and retain all the money except $1,000. Choosing to use your money to pay off a car loan is not a good idea if you are facing bankruptcy.
One of the biggest mistakes people make is putting off a consultation with a bankruptcy expert. If you are in over your head with creditors, you need to speak with qualified law professionals like those at The Port Law Firm. Bankruptcy is not imminent just because you have contacted a lawyer, but their knowledge and experience will help you through the process and ensure that it is handled properly. Even if you think you are doing the right thing and being responsible, your choices may complicate the bankruptcy process. It is important to get counseling as soon as possible when creditors begin calling and you recognize you may be in over your head. Even if you feel embarrassed or uncomfortable, seeking help may provide you with a brighter future.
The prospect of filing for bankruptcy can be scary and confusing. If handled properly, bankruptcy may be the answer to your financial woes.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.
