Many times, people find themselves in precarious financial situations caused by divorce, income loss, or medical bills. Debts pile up, and there just isn’t enough money to go around. If a person decides that bankruptcy is their only option, it’s important to be careful. By avoiding certain mistakes, clients ensure a smoother bankruptcy process.
Transferring Assets
Some debtors believe that if they move assets like cars, houses, and cash to someone else, those assets will be protected. However, this is simply untrue, and if it’s done, the asset may be considered fraudulent. A Bankruptcy Lawyer In Puyallup Wa will advise the client not to conceal his or her assets.
Giving Preferential Treatment to Certain Creditors
Some clients assume that they’ll improve their chances of a successful bankruptcy if they try to pay some of their debts before filing. However, this isn’t just misguided, it may damage the case. If a client makes an extra effort to repay a creditor, it is known as a preferential transfer. In many cases, the court-appointed trustee will sue that creditor in a clawback lawsuit so they can reclaim the money and distribute it fairly. The process delays the filing and potential discharge of debt.
Continuing to Use Credit Cards
One of the first things a client should do when they’re having financial troubles is to stop using credit cards for luxuries and cash advances. However, they can still use a bank-connected debit card to pay for everyday purchases.
Depositing Extra Funds Into a Bank Account
The only funds that should be put into a bank account should come from income sources. Do not deposit other funds, such as gifts and other people’s money, and don’t accept monetary gifts from others. Finally, avoid commingling business and personal funds to minimize the risk of fraud accusations.
If a client is considering filing for bankruptcy and can’t avoid some of these mistakes, they should remember that the court only considers certain kinds of transactions during specific time periods. Consult a Bankruptcy Lawyer In Puyallup Wa to avoid these issues and get case-specific advice. Call today to schedule a consultation or visit the website for more details.
