Stupid Bankruptcy Tricks

Don’t be misled by what you’ve heard about bankruptcy.  There are a lot of well-meaning yet misinformed people.  Below is a list of the more common myths, misunderstandings and stupid tricks I have had clients tell me.

  1. You can only file ONCE in a lifetime. You can file a Chapter 7 bankruptcy eight years after discharge, but discharge restrictions apply.  Consult with your attorney.  You can file a Chapter 13 bankruptcy immediately following a Chapter 7 bankruptcy, but you may not be eligible for a Chapter 13 discharge.  Again, we stress that you consult with your attorney to determine your eligibility.
  2. My son’s car is in my name, but he makes the payments, so it’s his car, not mine.   If your name is on the title, it is your car and your car alone.  If there is excess equity in this car the trustee will take the car or require a buyback/repayment of the excess equity.
  3. By law I am allowed to keep my car; they cannot take it. No, there is no such law.  If you have excess equity in the vehicle the trustee can and will take the car.  The trustee does not care if you have a car to get to work or not.
  4. They can’t take my savings. I’m paying my property taxes with it.  Yes, they can and will.
  5. They can’t take my tax refund. I earned it.  Yes they can and will.
  6. They can’t take my mutual fund, it is for my retirement. Unless the mutual fund is part of an IRA or under 401, 403, 408 or 457 of the IRS Code, they can and will take it.
  7. I’ll just give my expensive non-exempt asset to my friend and then I don’t have it and they can’t take it. You must disclose under oath with the penalties of purely all transfers of property made within one year of the filing, including what, to who, and how much (if any) you received.  Failure to disclose this information is bankruptcy fraud.
  8. I paid Grandma $3,000 two months before filing, she spent it, the trustee can’t do anything about it. Wrong, the trustee can have you repay the money to the bankruptcy estate, withhold the discharge (which means the creditors have six months to sue and collect), or the trustee can sue Grandma or convert you to a Chapter 13 bankruptcy.
  9. I am on the deed to Grandma’s house for probate purposes only. It is her home and the trustee can’t touch it.  If you are on the deed it is YOUR house too, and the trustee CAN sell it.
  10. If I go bankrupt I can keep my house and car and not have to make payments. Nothing in life is free.  This is so stupid it needs no explanation.
  11. Let’s not tell the trustee I own a Rolex. This is bankruptcy fraud, and you need to find another attorney.  I did not spend three years of my life and $90,000 plus to hide your crap.  If you intend to hide assets do NOT even think of calling my office. I don’t need business that badly.