Stupid Bankruptcy Tricks

Stupid Bankruptcy Tricks to Avoid

A big part of every bankruptcy attorney’s job is to educate their clients about the bankruptcy laws. Many people have received misconceptions about how the bankruptcy process. Below are a number of these misconceptions.

1. You can only file bankruptcy once.

Not true. You can file another Chapter 7 bankruptcy eight years after a Chapter 7 discharge, or six years after a Chapter 13 discharge. You can file a Chapter 13 bankruptcy four years after a Chapter 7, and two years after a Chapter 13 bankruptcy. However, certain restrictions may apply to a subsequent bankruptcy filing. Consult with an attorney.

2. I am allowed to keep my car or truck, right?

No. If you have excess equity in your car, the bankruptcy trustee can and will take the car.

3. The bankruptcy trustee cannot take my savings, my tax refund, my mutual funds, etc.

The bankruptcy trustee has the right to take your savings account and tax refund. They can also take any mutual fund, unless it is part of an IRA or unless the mutual fund falls under certain sections of the IRS Code.

4. My kid’s car is in my name. However, my kid makes the payments on the car. So it is his car, not mine.

Wrong. If your name is on the title, you are the owner, and the trustee has the legal right to take the car.

5. If I give a non-exempt asset to a friend before I file bankruptcy, they won’t be able to take it.

Again, wrong. Upon filing bankruptcy, you will be obliged to disclose under oath all transfers within one year of filing for bankruptcy. If you give your friend a valuable item and do not disclose it, both you and your friend could be implicated for bankruptcy fraud.

6. If I pay a relative $5,000 before a month before I file for bankruptcy and they spend the money, the trustee has no power to do anything about it.

This is not true. In fact, the trustee has a lot of power in this situation. The trustee can force you to repay the money to the bankruptcy estate, withhold a discharge, or the trustee can sue your friend.

7. If I am on the deed to my grandmother’s house for probate purposes, the house cannot be liquidated in bankruptcy.

Again, not true. If you are on the deed, the home is yours, and will be part of a bankruptcy proceeding.

These tips are not meant to scare anyone. However, we do wish to underscore that filing bankruptcy is a serious matter. The law office of Jerrold W. Bartman, Esquire, helps people throughout upstate New York file for bankruptcy.

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For more information or to schedule an appointment with an experienced personal bankruptcy lawyer, please contact us.