Although most debtors preparing to file for bankruptcy are under serious financial duress, they may still have issues regarding spending and asset allocation that require consideration in pre-planning. You may be eager to get your case rolling along-whether filing for Chapter 7 bankruptcy or Chapter 13-but it is imperative that you consult with your attorney regarding your entire financial picture, including all open accounts, recent purchases on credit, property exchanges that could raise concerns, and more.
Discuss Any Plans for Expenditures with Your Attorney
There may be completely above-board expenditures you need to make before filing-and ones you have already set aside funds for, or planned to use credit cards to expedite. You may need to purchase a property, buy a used car, take a necessary trip for work or family matters, or more. It is imperative that you discuss these plans with your attorney, and take care of these expenditures well before filing. If it appears later that you made massive charges to your credit cards or purchased an asset like a car directly before filing in hopes of having the debts discharged shortly after, you could be accused of fraud.
Credit card usage is closely examined. If you are getting ready to file for bankruptcy, going on a spending spree with credit you do not plan to (or cannot) re-pay is a very bad idea. If you have purchased ‘luxury goods’ totaling more than $675 within 90 days of filing, the charges could be viewed as attempted fraud. You should be very careful about taking cash advances prior to bankruptcy also. Any advances totaling more than $950 within 70 days before filing will raise red flags.
Not only will the bankruptcy trustee be examining your records, the creditor may come forth with questions and allegations regarding fraud. After filing a complaint regarding any questionable debts, they will be able to appear in court to expose any charges they contend are fraudulent.
Avoid Any Fraudulent Conveyances
Otherwise innocent transfers of property or other assets to someone prior to bankruptcy are potentially deemed fraudulent once the bankruptcy is filed. These transfers should not be made without consulting with an experienced bankruptcy attorney.
Offer Full Transparency Regarding Assets & Spending
Keep in mind that the bankruptcy court and the trustee are very experienced in these matters, and are quick to identify debtors who may be trying to take advantage of the system. The key in bankruptcy pre-planning is to take care of your finances accordingly and honestly, with a basic understanding of how the bankruptcy process works.
Be thorough in discussing all your assets with your attorney-as well as revealing all details to the bankruptcy trustee. While most clear-cut bankruptcy cases are meant to discharge overwhelming credit card debt, some may raise big questions as well. Obviously, your goal is to gain a fresh start, and a positive one. Be transparent at every turn.
Contact us for Help With All Your Bankruptcy Questions
Because Levitt & Slafkes, P.C. has already helped thousands of clients through the bankruptcy process, we understand exactly what you are going through, and we are here to answer all your questions. Call us at 973-323-2953, or contact us online to schedule a free consultation.