Skip to Content
Law Offices of Carol D. Ellis, P.A. Law Offices of Carol D. Ellis, P.A.
Call for a Free Consultation 561-513-5809
Top

Avoid Self-Destructive Acts Prior to Filing Bankruptcy

|

You have financial problems and you're not sure you want to file bankruptcy.  The first thing you need to know is this: That's okay!

Why should you know for sure that you need to file bankruptcy?  If you haven't met with a bankruptcy lawyer, how would you possibly understand what bankruptcy has to offer?

Feeling bad about "not knowing" really doesn't make sense.  And it also doesn't make sense to cancel or postpone your bankruptcy consultation.  Not knowing is the whole reason to find out about your options.

And there are other issues as well.

I cringe when clients come in to see me having postponed meeting with me for several months and then report all the really self-destructive things they've done because, until recently, "we didn't know if we wanted to file bankruptcy."  Here are some examples I see in my practice:

•             I kept paying my credit cards by using my IRA or 401(k) funds. This is a horrible idea because these funds are exempt from creditors and the bankruptcy trustee.  It's like flushing money down the toilet.  And remember, you'll need these funds some day.

•             I kept paying on a home I could not afford.  These clients have been needlessly throwing away money for several months as well.  Why continue paying large payments on a home you can't afford and in which-almost always-there is no equity?

•             I paid mom back.  After all, I can't stiff my own mother! This is another bad idea.  Paying mom (or dad, or other relatives) back prior to filing bankruptcy causes problems for them, which are all avoidable.

•             I transferred property into my dad's name so I could protect it from creditors.  This is a fraudulent transfer and could result in you not getting your bankruptcy discharge or getting dad sued, or both.

•             I took some cash advances on my credit cards to get by.  This is yet another bad idea that could get you sued for fraud, or, at the least, delay your bankruptcy filing by several months.

•             I used my equity line to pay my credit cards.   Now you've exchanged dischargeable, unsecured debt and turned it into secured debt, which must be paid if you want to keep your home.  I've had clients who have done this only to come in a year or two later needing to file bankruptcy anyway.

•             And there are many others!

The point here is that it's perfectly fine not to know.  Just realize that there are many other things you don't know and that before you make decisions-many of which will have unpleasant consequences-you should consult a bankruptcy lawyer.  A good bankruptcy lawyer doesn't "sell" bankruptcy; instead, he'll help provide good options for your financial problems.  Sometimes, that means filing bankruptcy, but many times it doesn't.  Find out your options before making any decisions.