4 Reasons Bankruptcy May Be A Very Bad Idea (2022)

TL;DR

Bankruptcy can be problematic if you have unprotected assets, recently transferred assets, loans from friends or family, or if your debts were incurred through fraud.

Transcript

hey everybody John skiba here from the consumer Warrior YouTube channel and in this video I'm going to share with you four reasons why bankruptcy may be a very bad idea and more trouble than it's worth but this is your first time here to my YouTube Channel please click subscribe check on that little bell that way you'll be notified each and every w... Read More

Key Insights

• 👮 Filing for Chapter 7 bankruptcy may not be beneficial if you have assets that are not protected by exemption laws.
• 📼 Recent transfers of assets out of your name should be avoided before filing for bankruptcy.
• 👪 Paying back loans from family or friends in the last 12 months may be considered preferences and subject to reversal.

Questions & Answers

Q: What are unprotected assets in a Chapter 7 bankruptcy?

Unprotected assets are those that have values exceeding what is protected by exemption laws in your state. These assets can be seized, sold, and used to pay your creditors.

Q: Can recent transfers of assets out of my name be a problem in bankruptcy?

Yes, if you transferred assets out of your name within the last two years without receiving reasonably equivalent money in return, the bankruptcy court can consider them improper transfers and undo them.

Q: Why are payments to family or friends in the last 12 months called preferences?

These payments are called preferences because they show a preference for paying back family or friends over other creditors. The bankruptcy trustee may require these payments to be given back.

Q: How can bankruptcy worsen debts incurred through fraud?

Bankruptcy provides a forum where creditors can raise fraud-related objections. Additionally, the bankruptcy trustee investigates your financial history, potentially making the fraud issue worse.

Summary & Key Takeaways

• Filing for Chapter 7 bankruptcy can be problematic if you have assets that are not protected by exemption laws, as the bankruptcy trustee may seize and sell those assets to pay your creditors.

• Recent transfers of assets out of your name can also cause issues in bankruptcy court, as the court may consider them improper transfers and undo them.

• If you have been paying back loans from family or friends in the last 12 months, these payments may be considered preferences and may need to be given back to the bankruptcy trustee.

• Bankruptcy can make fraud-related debts worse, as creditors have the opportunity to raise objections and the bankruptcy trustee thoroughly investigates your financial history.