Bankruptcy Chapter 7 | Reasons Why Declaring Bankruptcy May Be A Very Bad Idea

TL;DR

Bankruptcy may not be ideal if you have unprotected assets, engaged in fraudulent transfers, made preferential payments, or if debts were incurred through fraud.

Transcript

hey everybody john skiba here i'm a bankruptcy attorney in the state of arizona and i'm also the founder of the consumer warrior youtube channel and today i'm going to share with you four reasons the bankruptcy may be a very bad idea for your situation if this is your first time here at my youtube channel please go ahead and click subscribe check o... Read More

Key Insights

• 😟 Bankruptcy may not be beneficial if you have non-exempt assets, such as boats or RVs, as they can be seized and sold to pay off debt.
• 🥺 Transferring assets without receiving anything in return within two years of filing bankruptcy can be considered fraudulent and may lead to complications.
• 👪 Making preferential payments to family or friends within the past year may result in those payments being collected and distributed to other creditors.

Questions & Answers

Q: What are unprotected assets in bankruptcy?

Unprotected assets refer to those that are not exempt under bankruptcy laws. These may include boats, RVs, or other valuable possessions that can be seized and sold to pay off your debt.

Q: How do fraudulent transfers affect bankruptcy?

Fraudulent transfers occur when assets are transferred without receiving anything in return. If such transfers occurred within two years of filing bankruptcy, the court can reclaim those assets and distribute the proceeds to your creditors.

Q: Why are preferential payments problematic in bankruptcy?

Making preferential payments to family or friends within the year prior to filing bankruptcy can be seen as unfair to other creditors. The court may collect those payments and evenly distribute them among all creditors.

Q: What happens if debts were incurred through fraud in bankruptcy?

If a creditor asserts that debts were incurred through fraud, they may file an adversary proceeding against you. This can result in the debt not being discharged in bankruptcy, leading to additional legal complications and expenses.

Summary & Key Takeaways

• Bankruptcy can be an effective solution for debt problems but may not be suitable in certain situations.

• If you have non-exempt assets, such as boats or RVs, they may be seized by the court and sold to pay off your creditors.

• Transferring assets without receiving anything in return within two years of filing bankruptcy can be considered fraudulent and may lead to complications.

• Making preferential payments to family or friends within the past year may result in those payments being collected and distributed to other creditors.

• If you have debts that were incurred through intentional fraud, creditors may file an adversary proceeding to prevent those debts from being discharged.