Planning Greensboro bankruptcy - a few things to avoid
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If you reasonably see yourself filing Greensboro bankruptcy at some point in your near future, there are certain things you should avoid. Engaging in these actions can put your debt relief at risk. You want the best results from your bankruptcy case and to avoid any accusation from the court of fraud. Here are five things to avoid doing before you file your bankruptcy case.
#1 Don’t incur any new debt after deciding to file
Bankruptcy was designed to offer relief to consumers who wound up in over their heads with debt. However, the presumption is that when you took the debt, you intended to pay it in full. The law assumes circumstances cropped up preventing you from fulfilling your obligation.
Once you’ve decided to file bankruptcy (or are considering it), any debt you adopt with the knowledge you might not repay is dodgy. If you apply for debt with no intent to repay it, that’s fraud and not what you want in your bankruptcy case. So don’t do it!
#2 Don’t delay filing your case too long
Many people struggle with the decision to file Greensboro bankruptcy. It is a significant decision and not one to be made lightly. However, delaying the choice too long isn’t wise. In some cases, filing too soon is problematic and in others, delaying can cause worse problems.
If you delay too long, you might be hit with lawsuits, judgments, liens and other negative consequences. You might also face foreclosure of your home or repossession of your vehicle. Often, you can avoid or delay the actions with a well-timed bankruptcy filing.
#3 Don’t repay a family member or friend
US bankruptcy law demands fair treatment for all creditors. Some creditors get priority like child support and alimony recipients or the federal government if you owe recent income taxes. However, most creditors fall into a larger subset and must be treated the same by you and the court.
Problems might arise if you owe a debt to someone and you want to pay it before other creditors. That’s called preferential treatment and is against the bankruptcy code. That means you can’t slip a family member a few hundred bucks you owe them before you file your bankruptcy case.
If you make a preferential payment to any creditor or favor them over another, the Trustee can force the creditor to repay the money. This can be much more embarrassing for you and the creditor, especially if it’s a friend or family member, so just don’t do it.
#4 Don’t transfer any property
Giving away or selling your property just before filing bankruptcy is another bad idea. You can sell property to pay living expenses, but only if you do so via proper channels. For instance, if you have an extra car, you can sell it to pay your rent or utilities.
However, you must sell it for fair market value or greater. You can’t sell at a cut-rate price to someone you know so that it’s not listed in your name anymore. The courts will scrutinize any significant asset or property transactions in the months leading up to your bankruptcy.
#5 Don’t drain your retirement account
When you’re neck deep in debt and creditors are calling to hassle you for payment, you may be tempted to tap your 401(k) or IRA to pay up and get them to go away. That’s not a good plan. Your retirement accounts are safe from the bankruptcy court, trustee, and creditors.
Pulling money out of your retirement account comes with negative tax consequences plus penalties and other ill-effects. Leave that precious retirement money alone and look to the legal debt-relief solution of Greensboro bankruptcy to satisfy your unaffordable debts.
To find out more about the benefits of North Carolina bankruptcy, read reviews from our clients, then call +1-919-646-2654. Schedule a free Greensboro bankruptcy consultation at one of the locations of the Law Offices of John T. Orcutt in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.