Nobody’s going to ask you how come you ended up being broke, that’s your problem. However, if you keep purchasing luxury goods in the 70-90 days before filing for bankruptcy that is considered presumptive fraud.
Fresno, CA – In times of financial hardship, filing for bankruptcy may be your best option to stay afloat. Whether you’re considering filing under Chapter 7 or 13, you must prepare in advance. If you’ve never been in this situation before, you should reach out to seasoned attorneys before you make your move. There are lots of things to take into account, you need to decide if the moment is right and avoid making risky or unnecessary financial transactions.
Here’s a list of mistakes that might hamper your chances of making the most of what a bankruptcy procedure has to offer under California laws.
Don’t rush into bankruptcy
You may be at your wit’s end, but filing for bankruptcy is not a decision to be taken rashly. Things may look bad today, but they could get worse tomorrow. Experienced Fresno bankruptcy lawyers routinely remind their clients that if they file for Chapter 7 they won’t be able to do it again for another 8 years, during which a lot of things may happen. With Chapter 13, the wait time is six years.
When filing for bankruptcy you need to look at the type of debt that can be discharged and ask yourself if it wouldn’t be more prudent to wait a bit longer. For instance, if you have a major health issue you must think of the medical bills that will keep coming even after you file for bankruptcy. Filing for Chapter 7 allows you to erase all your medical expenses so it’s often advisable to wait until the doctors give you the all-clear and there are no more forthcoming bills.
However, if one or more creditors have filed lawsuits against you, your California bankruptcy lawyers will probably advise you to file for bankruptcy as soon as possible. Once you do that, the bankruptcy procedure will effectively stop all pending lawsuits and relieve the debt.
Don’t take money out of your retirement account
This is, unfortunately, a very common mistake. In a desperate effort to avoid financial ruin, many people take money out of their retirement accounts to pay off their most aggressive creditors. In most cases, it’s only a temporary solution. At the end of the day, you’ll still have to file for bankruptcy. Keep in mind that the money in your retirement account is protected when you file under Chapter 7. File for bankruptcy as soon as possible, erase the debt and keep your retirement money.
Stop buying luxury items
Nobody’s going to ask you how come you ended up being broke, that’s your problem. However, if you keep purchasing luxury goods in the 70-90 days before filing for bankruptcy that is considered presumptive fraud. Two months before filing for bankruptcy you know that you cannot possibly pay your debts. If you use a credit card to purchase something extravagant, it’s obvious you have no intention to pay your debt. This type of debt will not be discharged when you file for Chapter 7 in California. You can, however, use your credit card to pay for basic life necessities, like food and clothing.
Don’t sell or hide assets
Seasoned Fresno bankruptcy lawyers warn their clients to be very careful what financial transactions they make before filing for bankruptcy. Be prepared to explain any recent real estate transaction. If you are caught trying to transfer or hide assets, you may be accused of fraud. The risk is that you will be denied a debt discharge and you may face criminal penalties for fraud.
This is yet another reason why you should seek professional advice from knowledgeable lawyers before filing for bankruptcy in California.
Tip: Since you’ll be dealing with lawyers and court clerks, now would be a good time to educate yourself a bit on legal matters.