Not many people know that bankruptcy is a constitutional right. In Article1, Section 8, Clause 4 of the United States Constitution one of the primary duties Congress is to establish uniform laws or bankruptcy throughout the United States and its territories. Your right to a successfully discharged bankruptcy depends on your ability to understand and follow those laws, executing the requirements thereof. For an individual, that can be a pretty tall order. Bankruptcy is considered a specialty practice because it is complicated. Unfortunately, many people make it more complicated for themselves by making huge mistakes before they file.
Fraudulent Conveyance. If you remove your name from an item of property either by signing a quitclaim, transferring property or money to a friend, family member, or business partner with the intent of hiding it from creditors in bankruptcy, you may want to think again. Even if you had no intent to defraud the court for your creditors, an action like this could senior bankruptcy petition dismissed.
Trying to pay down creditors before filing. The court wants to be strictly impartial when it comes to paying creditors, with secured debts being paid first and personal or unsecured debts last. The court will look overpayments made before filing bankruptcy and may “clawback” these funds – even if they were paid to an individual – and redistribute them among your creditors.
Trying to discharge debts that are not dischargeable in bankruptcy. Certain types of debt either cannot be discharged or are very difficult to discharge in bankruptcy. Student loans can be discharged with a showing of undue hardship, but come prepared to do battle. Other debts that are nondischargeable are alimony and child support; civil and criminal fines that must be paid to local, state, or federal authorities; certain tax debts cannot be discharged; debts that are related to fraud, criminal activity, willful and malicious injury, false representation, and debts accrued in the aftermath of DUI.
Filing for the wrong type of bankruptcy. Personal bankruptcies are Chapter 7 and Chapter 13 bankruptcy. However, Chapter 7 is a liquidation bankruptcy that requires a means test before you file. Chapter 13 bankruptcy is a reorganization of debt that covers those who do not clear the bar of the means test.
Blowing off credit counseling. Not completing your credit counseling course before filing bankruptcy will result in a dismissal. Since this counseling is available online or by phone, nobody has any excuse for not completing this requirement.
Incomplete and incorrect forms. Filing for even a “simple” Chapter 7 bankruptcy requires filling out and filing a stack of paperwork. Additionally, there may be state or local for that need to be filed on top of the federal standard forms. Even if you are filing without the assistance of an attorney, using a paralegal or bankruptcy preparer, you – not the bankruptcy preparer or paralegal – are responsible for making sure that are filled out completely, accurately, and correctly.
Not understanding the Florida property exemptions before filing bankruptcy. Exempt property varies from state to state, and if there is no provision in state law for an exemption, then federal law is followed. Among the assets and property exempt from bankruptcy are health savings accounts, college savings accounts, and even hurricane savings accounts; $1000 worth of personal property and $750 per week in wages; disability and Social Security income; some pensions, retirement benefits, and retirement accounts; and the often-misunderstood homestead exemption.
Not understanding the homestead exemption. No matter how much it’s worth, your home is protected in bankruptcy – as long as you have lived here in Florida 40 months in the home as your primary residence. The homestead is limited to 160 acres or less outside of a municipality, one-half acre or less within a municipality. If you have not been living here long enough, then you may only exempt $146,450.
Blowing off your 341 meeting. A 341 meeting is a meeting of your creditors. It is mandatory that you attend whether you have filed for Chapter 7 or Chapter 13. After you file, you’ll receive a notice from the court telling you when and where this meeting will be. Failure to attend will result in – yes – dismissal of your petition.
Failing to make your plan payments for your chapter 13 bankruptcy. It can take months or years for the court to prove your plan to repay your creditors. However, 30 days after filing a petition, your first payment is due and will be due every 30 days thereafter. Failing to make your payments will result in – say it with me now – dismissal of your petition.
Taking on more debt. Whether it’s running up maxing out your current credit cards, taking out personal loans, or opening up new lines of credit, the court will take a dim view of these activities. In fact, the court may exempt all new purchases made on new and existing lines of credit and leave you to pay in full if these steps were taken out within 90 days of filing a petition.
If you are starting to consider bankruptcy you owe it to yourself to get advice. Bankruptcy preparers and paralegals are prohibited from offering legal advice, as are clerks of the court. Only a licensed attorney can offer legal advice and getting advice on a bankruptcy from a bankruptcy attorney can help you achieve the result desired – a successful discharge. Van Horn Law Group can help you determine the best course of action before filing bankruptcy. Our offices in West Palm Beach and Fort Lauderdale are open seven days a week, and your first consultation is free. Gather up your paperwork, make an appointment, and we will provide you with the best advice on how to proceed. You have nothing to lose but your debts, so call us today!
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