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Look out for Common Bankruptcy Pitfalls!

Bankruptcy pitfalls

Bankruptcy is a legal process that helps us eliminate our debts and start afresh financial life. Furthermore, the purpose of bankruptcy is for you to declare your inability to repay your debts; even with the help of other debt relief or debt settlement options. Moreover, the bankruptcy laws enable you to take the required steps to discharge your debts. And, they help you start a new financial life. However, the slightest misstep in your bankruptcy petition or schedule can land 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 bankruptcy pitfalls can happen and you should look out for them.

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 the court awarded the legal fees related to support to your ex-spouse, those will probably not be dischargeable either. In filing for bankruptcy, you need to include any obligations that you owe. Or, payments that you have an entitlement 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. This is in order to determine if these liabilities are dischargeable. And, if not, how their treatement will be 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. Ordering the transcripts from the IRS is easy.

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 has 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. Moreover, they will often object to a debtor’s discharge. This is 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. Moreover, 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.”

If you have questions about Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or other alternatives, please feel free to call my office at 888-886-0020, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

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