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Top 10 Bankruptcy Do’s and Don’ts for Those Contemplating Bankruptcy

If you are contemplating filing for bankruptcy relief, you need not be afraid of the bankruptcy process.   However, the filing of a bankruptcy should not be perceived as being “easy.”  In short, serious problems may arise if you do not approach the process with due care and respect.   There are some things that you want to avoid which could make the process a lot more complicated than it needs to be.  Conversely, there are things that you can do that could make the process a lot more simple and uncomplicated.

TOP 10 BANKRUPTCY DON’TS

1.  Don’t transfer or give any of your property to friends or relatives.

2.  Don’t “pay off” any debt to any friend or relative thinking that you then will not have to include that person in your bankruptcy.

3.  Don’t pay off  friends’ or relatives’ debts for them.

4.  Don’t sell any of your property for less than its fair market value.

5.  Don’t invest any of your limited time, energy and resources with any so-called “debt settlement companies” who will only take your money and make false promises about being able to “settle” with your creditors.

6.  Don’t incur new debt on your credit cards and do not use them to gamble at casinos or otherwise.

7.  Don’t rely on or put faith in much of your own research that you may have done on the internet because a lot of the information is just flat wrong, even from the sites of attorneys who claim to be “experienced.”

8.  Don’t believe the threats and fear-mongering collection agents and creditors may be giving you because they can’t do what they may be threatening at all or for a very long time.

9.  Don’t cash in life insurance policies or 401k plans to pay off or pay down creditors.

10. Don’t use one credit card to pay off another or to pay your taxes.

TOP 10 BANKRUPTCY DOS

1.  Do retain a qualified and truly experienced bankruptcy professional and thoroughly investigate anyone whom you are considering hiring because there are a lot of attorneys who are actually very new to the practice of bankruptcy law but who purposefully misrepresent themselves as “experienced” or “highly qualified.”

2.  Do make sure that all of your state and federal tax returns have been filed.

3.  Do disclose ALL of your property for your attorney and expect your attorney to explain why you need to disclose ALL of your property and how you are to disclose it in your bankruptcy petition and related schedules.

4.  Do understand that bankruptcy is nothing to be afraid of but that it merits a very healthy respect because the bankruptcy petition and related schedules that you complete with your attorney are not just “forms”; rather, they are legal pleadings that you and only you sign subject to penalty of perjury.

5.  Do expect your attorney to be knowledgeable about the bankruptcy process, to be able to thoroughly explain the bankruptcy process to you, to timely answer all of your questions, to return your telephone calls and to get you through the bankruptcy process with as little disruption to your life as possible.

6.  Do disclose ALL of your creditors, including student loans, friends and relatives, criminal fines, overdraft fees, medical bills, tax debts, child support debts, past due utility bills and ALL other creditors and all other parties who MAY have any legal claims against you, such as via a motor vehicle accident or damage to property.

7.  Do maintain documentation concerning your debts and assets including, but not limited to, billing statements, state and federal tax returns, mortgages and vehicle purchase agreements,  title certificates for your vehicles, boats, ATV’s, etc., deeds and property tax statements concerning land in which you may have an ownership or possessory interest, 401k statements, life insurance policies, savings bonds, homeowners insurance policies, divorce decrees, and jewelry appraisals.

8.  Do understand that bankruptcy DOES nullify or discharge your legal and contractual obligations to pay most of your creditors’ claims but that it DOES NOT necessarily make your debts go away or disappear and that some claims, such as criminal fines, survive bankruptcy.

9.  Do accept the reality that sometimes people can and do lose property in bankruptcy but that this is the exception rather than the rule.  Sometimes the loss of property is unavoidable and one must accept that but keep in mind that a truly competent bankruptcy professional can minimize such a consequence and can even, sometimes, prevent it from happening.

10.  Do consult with parents or friends or relatives (you do not have to tell them why) about whether they have listed you in a will or put your name on their land or on any of their bank accounts.

Keep in mind that you WILL  get bankruptcy relief as long as you follow the road map which is the bankruptcy code.  Your case will be approved as long as you are honest and forthright in your bankruptcy petition and related schedules.  The key to a successful bankruptcy proceeding is to disclose, disclose, disclose in your bankruptcy petition and related schedules and to testify truthfully at your bankruptcy hearing.   Know that bankruptcy may not be right for everyone.  Sometimes, the best option is not to file a bankruptcy at all.  However, hiring a competent and qualified bankruptcy professional will make all the difference.  Any truly skilled professional will help determine whether the bankruptcy process could be either a benefit to you or a nightmare.

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What is Bankruptcy?

The word “bankruptcy” has roots from two words found in ancient Latin; “bancus” which translates to “bench,” and “ruptus,” which can be interpreted as “break” or “shattered.” In ancient times a “banker” would set-up his bench in the market area and conduct his business. When a banker failed or lost his money, the bench would be broken and put on public display so everyone would know that this particular banker was out of business or “broke.”

In ancient Greece, bankruptcy did not exist. If someone became indebted to another, they became “debt slaves” until their obligation was discharged. Thankfully, England began to write laws and statutes in the 14th century that dealt with insolvency, providing the model for laws adopted by the United States and specifically dealt with in our Constitution. Although guidelines exist, bankruptcy law varies from state to state.

Across Minnesota and the country there has been an alarming, and news-making, increase of bankruptcy cases filed over the past several years. Student loan debt is a hot topic issue as students, carrying many thousands of dollars in student loan debt, graduate and face a struggling economy and sluggish job growth.   Along with an alarming increase in medical costs (which is the number one cause of bankruptcy), these two dilemmas can add to the financial burden of those subjected to sudden lay-offs, lengthy unemployment, prolonged unproductive employment searches and/or underemployment. Divorce can also put tremendous financial strain on both parties. These are not rare occurrences but things folks deal with every day which can stress financial wellbeing past tolerable limits.

Whatever may have caused an accumulation of unmanageable debt, make sure that you take the time to find a qualified attorney to advise and represent you. If you live in Southern Minnesota, the certified and experienced legal firm you can trust to work hardest for you when your financial future is at stake is the Behm Law Group.

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Financial Dysfunction and Fun Have Never Gone Together

The phrase “Let’s put the fun back into dysfunctional!” has become famous over the years. It can be found on coffee mugs, bumper stickers, magnets and more. The one place it can’t be found is your finances, especially if you are going through a bankruptcy. Since the Great Recession hit a few years ago, many people who thought the big b-word could never happen to them have had to file for personal bankruptcy.

Even businesses that appeared rock-solid, from mega retailers to mom and pop stores, have had to file for bankruptcy protection during these times of financial meltdowns. Banks and lending institutions that previously provided loans have experienced fiscal woes of their own, crippling manufacturers and retailers alike in their ability to refinance and obtain credit in order to continue production and sales.

The good news: bankruptcy filings have gone down. The bad news: they’ve gone down from recent record highs. The record high number of bankruptcy filings was not an isolated event. It happened all across the country, in small towns and big cities alike. Mankato, Minnesota, a community that’s received lots of praise on the national level, was just as financially rocked as the communities that surround it.

Many who face a potential bankruptcy cringe at the thought of having a spotlight cast upon their financial troubles. To protect assets however, one must fully disclose all financial information to their bankruptcy lawyer when filing for bankruptcy. Bankruptcy attorneys are there to help, not to judge those filing to seek financial protection. Whether you need to file a Chapter 7, Chapter 11 or Chapter 13 bankruptcy, your bankruptcy lawyer is going to need all pertinent financial records so they can help you protect your assets.  With their professional assistance your dysfunctional finances can receive renewal, giving you a fresh start and a way back to being in control of fully functioning finances.

Typically, Mankato likes to “rock it” in the music scene. Rolling Stone magazine recently shone a light on Mankato, Minnesota’s music scene and ranked Mankato among the top 50 college towns for its vibrant music scene. Many would agree that it’s fun to “rock on” in life but being “on the rocks” financially and facing bankruptcy is no fun in any sense of the word.  If you find yourself helplessly staring at a financial crisis with no apparent way to work it through, contact us and let us provide you with “rock solid” and professional support if a bankruptcy is required.

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Sometimes Bad Things Happen to Good People

Few things in life can be as embarrassing as having to admit that you need to declare bankruptcy.  Maybe you associate bankruptcy with some sort of failure: be it a financial or even moral failure.

However, there are many things that can lead to bankruptcy that are not your fault such as a job loss, mounting medical bills, a lawsuit, or other types of financial hardship.

And even if you feel like it is your fault, our experience is that there are many things out of your financial control that may have led to your need to declare bankruptcy.  Many good people have had to declare bankruptcy, and declaring bankruptcy doesn’t make you a bad person.

If you are in a position where you have to declare bankruptcy, the best way to look at it, is a means to getting a fresh start in controlling and rebuilding your financial life.  It is a legal process by which you can get relief from overwhelming bills and start to rebuild your finances again.

However, bankruptcy is not something to enter into lightly.  It can be complex, and there are consequences you need to know about.  That’s why you need an experienced bankruptcy lawyer who can lead you through the maze of legal requirements you will need to navigate regarding bankruptcy law.

At the Behm Law Group, located in Mankato, Minnesota, we pride ourselves on our extensive experience and expertise in bankruptcy law and limit our practice to bankruptcy cases only.

We know that sometimes bad things happen to good people, and we’ll treat your case with privacy and respect.  We will work at your side to achieve the legal relief your case demands in order to help you attain a new and fresh start.