Covid-19 Bankruptcy Chapter 7 | 5 Things You MUST Avoid if Chapter 7 Bankruptcy is in Your Future

TL;DR

Learn about the five things you should avoid if you are considering filing for bankruptcy during the COVID-19 pandemic.

Transcript

• Hey everybody, John Skiba here. I'm recording this video at the end of August, in the year 2020. We're right in the middle of the whole COVID-19 pandemic and it's causing a lot of financial hardship for a lot of people. A lot of people that I talk to on a daily basis are realizing that they may have to file bankruptcy in the near future. In this ... Read More

Key Insights

• 🥡 Taking on additional income through a second job or overtime can disqualify you from Chapter 7 bankruptcy.
• 🥺 Repaying family or friends prior to bankruptcy can lead to complications, as those payments may be considered preferential.
• 📼 Transferring assets before bankruptcy should be avoided, as it can be seen as an attempt to hide assets from creditors.
• 💳 Making large credit card purchases before bankruptcy, especially luxury items, can lead to those charges not being discharged.
• ❓ Funds in retirement accounts are usually protected in bankruptcy and should not be used to pay off debts.
• ❓ The COVID-19 pandemic has caused financial hardships for many individuals, increasing the likelihood of bankruptcy filings.
• 📏 Understanding the rules and regulations surrounding bankruptcy is crucial to ensuring a smooth process and avoiding potential pitfalls.

Questions & Answers

Q: Why should I avoid taking on a second job or working overtime when considering bankruptcy?

If you are planning to file for Chapter 7 bankruptcy, taking on additional income can push you over the qualification limits, making you ineligible for Chapter 7 and forcing you to go for a longer bankruptcy process.

Q: Can I pay back family or friends before filing for bankruptcy?

It is not advisable to pay back family or friends prior to bankruptcy as it can be seen as a preference and the bankruptcy trustee may sue them to retrieve the money, causing complications and potential strain on your relationships.

Q: Are there risks in transferring assets before filing for bankruptcy?

Yes, transferring assets within two years prior to filing for bankruptcy must be disclosed, and if the transfers are deemed illegitimate, they can be undone by the bankruptcy court, causing further complications.

Q: How can using credit cards prior to bankruptcy impact the process?

Luxury purchases made within 90 days before bankruptcy or large cash advances taken within 70 days can be challenged by the credit card company and might not be discharged through bankruptcy.

Q: Should I withdraw money from my retirement account to pay off debt before filing for bankruptcy?

It is not recommended as retirement accounts are typically protected in bankruptcy, and withdrawing from them can result in penalties and compromise your long-term financial security.

Summary & Key Takeaways

• It's important to be cautious when considering bankruptcy during the COVID-19 pandemic as financial hardships increase.

• Taking on a second job or working overtime can impact your qualification for a Chapter 7 bankruptcy.

• Paying back family or friends before filing for bankruptcy can create complications.

• Avoid transferring assets or making large credit card purchases before filing for bankruptcy.

• Withdrawing money from retirement accounts is not recommended as they are generally protected in bankruptcy.