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Don’t Do This When Considering Filing Bankruptcy

Robert J. Adams & Associates March 18, 2015

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:

  • 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.