Lookout for Common Bankruptcy Pitfalls!
Written by Emil Fleysher | February 11, 2013 | Bankruptcy
Bankruptcy is a legal process that helps us eliminate our debts and start a fresh financial life. Bankruptcy is designed for you to declare your inability to repay your debts even with the help of other debt relief or debt settlement options. The bankruptcy laws enable you to take the required steps to discharge your debts and help you start a new financial life. However, the slightest misstep in your bankruptcy petition or schedules can land in you in a very uncomfortable situation. For that reason, you should always consult with a qualified bankruptcy attorney regarding relating to bankruptcy before filing. Some common issues to look out for are the following…
- Can you keep your house in Bankruptcy?
- In Florida, the equity in your homestead property is 100% protected. Article X § 4(a} of the Florida Constitution states: There shall be exempt from forced sale a homestead … upon which the exemption shall be limited to the residence of the owner or the owner’s family. It is well settled law in Florida that the homestead character of a property depends upon an actual intention to reside thereon as a permanent place of residence, coupled with the fact of residence. A debtor’s abandonment of a homestead strips the property of its homestead character for the purposes of the Homestead Exemption. A homestead has been abandoned when it is no longer a “bona fide” home and place of permanent abode. The intention of the debtor is the determining fact in deciding whether a homestead has been abandoned. A debtor can take certain acts, such as listing the property for sale, which may serve to defeat an otherwise valid entitlement to the Homestead Exemption. There many technicalities that can help or hurt your ability to claim a homestead exemption on a property in Florida. Please consult a qualified Bankruptcy attorney to discuss your situation before filing.
- Do you owe Child Support Payments?
- If you are a divorcee and you have to make child support payments, these obligations will not be dischargeable in your bankruptcy. Furthermore, if legal fees related to support were awarded to your ex-spouse by the court, those will probably not be dischargeable either. In filing for bankruptcy, you need to include any obligations that you owe or payments that you are entitled to receive.
- Do You Owe the IRS Back Taxes?
- If you owe money to the IRS for back taxes you should consult with a qualified bankruptcy attorney to determine if these liabilities are dischargeable and, if not, how they will be treated in bankruptcy. A good starting point would be to order transcripts of your taxes for the years in question and provide them for your attorney to review. Transcripts may be easily ordered from the IRS.
- Have you been Using your Credit Cards in the Months Leading up to Filing your Bankruptcy?
- One type of bankruptcy fraud that the 2005 Bankruptcy Abuse and Prevention Act was designed to prevent involves Debtors who intentionally charge up their credit cards just before filing their bankruptcy. Creditors & Bankruptcy Trustees are have systems in place to prevent this type of bankruptcy fraud and will often object to a debtor’s discharge in instances where more than $600 was charged for non-essential purchases within 90 days of the filing of the bankruptcy.
These are just a few examples of the common pitfalls debtors in bankruptcy often fall into. It is important to consult and work with a qualified bankruptcy attorney to avoid the heartache and expense related to a “bankruptcy case gone bad.”
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