I apologize ahead of time for the serious nature of the following warnings, but it is my responsibility to warn you and give you advice on any potential pitfalls involved in filing bankruptcy. We are here to help you and protect you along the way. It is important that you understand and take seriously the following points if you are going to be filing bankruptcy.
Things to Know Before Filing for Bankruptcy
- IMPORTANT: Do not incur any new debt prior to filing bankruptcy! Running up new debt when you know that you are in a bankruptcy situation is absolutely ‘fraudulent.’ Debts incurred fraudulently are not dischargeable through bankruptcy, and can even lead to you having your entire case thrown out.
- IMPORTANT: Do not give away, trade-in, or sell ANYTHING (that includes money, cars, real estate, jewelry, personal belongings, whatever!) prior to or during your bankruptcy case! This can be seen as a ‘fraudulent transfer of assets’ before filing bankruptcy. Similarly, if you are in bankruptcy, you cannot transfer property without the trustee’s permission – – technically, your property is owned by a ‘bankruptcy estate’ and does not fully belong to you until your discharge. Under certain circumstances, it is allowable to transfer certain types of assets, but it is important that you talk with us first.
- IMPORTANT: Do not make any large payments to any unsecured creditors prior to filing (especially if the creditor is a family member or a business associate)! The only creditors that you should continue to pay prior to (and after) filing bankruptcy are secured creditors (mortgages or car payments), and any necessary expenses (rent and/or utilities). If you have made one or several payments which total $600+ to anyone unsecured creditor within 90 days of filing, the trustee can demand that money back from that creditor so that the money can be broken up equally amongst all unsecured creditors. This rule does not apply to secured creditors (mortgages, car payments). If you wish to keep those assets, you MUST keep paying those creditors.
- IMPORTANT: CONCERNING SECURED DEBTS (mortgages, car payments, etc.): You absolutely must make your payments to secured creditors ON TIME after filing bankruptcy, especially in a Chapter 13 bankruptcy. NOTE that automatic deductions will be stopped following bankruptcy so make sure to watch your checking account! This is by far the most common cause for complications in bankruptcy cases. If you get behind on a secured payment after filing bankruptcy, the creditor can make a motion to the court to vacate the automatic stay and take the asset away from you (and they most likely will).
For Chapter 7 Bankruptcy Debtors Only
- IMPORTANT: We cannot file your bankruptcy petition with the court until the entire attorney’s fee has been paid in full. We can make monthly payment arrangements. Please call our office for details.
- IMPORTANT: Anything you own above what the law allows you to keep in the exemptions is fair game for the trustee to take. When you choose to file a Chapter 7 bankruptcy, you are essentially surrendering all of your assets to the trustee except for those things the law specifically allows you to keep in the exemptions. The exemptions are different for both Kentucky and Indiana, so please call your attorney to see if an exemption will allow you to keep your asset, whether we will need to make payment arrangements with the trustee to be able to keep it, or even if the property will need to be surrendered to the trustee.
Contact Us Today For More Legal Advice
At Daniels Associates LLP, we understand that filing for bankruptcy can be an emotional and confusing process. If you are filing for bankruptcy in Kentucky or Indiana, we can give you advice on the best practices. Please give us a call at (502) 583-8300 or contact us by filling out our contact form.