Thinking of Chapter 7 Bankruptcy? Don't Do These 3 Things

TL;DR

Do not pay off loans to family or friends, transfer assets, or use credit cards before filing for bankruptcy.

Transcript

hey everybody John skiba here from the consumer Warrior YouTube channel and in this video I'm going to share with you three things you absolutely should not do if you're considering bankruptcy in the near future but if this is your first time here to my YouTube Channel please click subscribe check on that Bell that way you'll be notified each and e... Read More

Key Insights

• 👪 Paying off loans to family and friends within 12 months before bankruptcy can be a problem due to preferential payment regulations.
• 📼 Transferring assets out of your name within two years of filing for bankruptcy may result in unwinding the transfer and distributing funds to creditors.
• 🥳 Charges for luxury items or cash advances made within 70 to 90 days prior to bankruptcy can be deemed non-dischargeable.

Questions & Answers

Q: Why should you not pay off loans to family or friends before filing for bankruptcy?

Repaying such loans within 12 months can be considered a preferential payment, which means the court can require the money to be redistributed among all creditors. It's best to wait until after the bankruptcy case is completed to repay these debts voluntarily.

Q: What happens if assets are transferred out of your name before bankruptcy?

Any transfers that occur within two years prior to filing for bankruptcy, without receiving an adequate value in return, can be considered fraudulent transfers. The court may unwind the transfer, sell the asset to distribute funds to creditors. It's advisable to keep assets in your name and consult with an attorney for proper protection.

Q: Can charges made on credit cards be discharged in bankruptcy?

Charges for luxury items or cash advances made within 70 to 90 days prior to filing for bankruptcy can be considered non-dischargeable. Creditors can object to these charges, and you may end up having to repay them.

Q: Is bankruptcy always the best option for dealing with debt?

No, bankruptcy may not be the best solution for everyone. A bankruptcy attorney can help assess your situation and explore non-bankruptcy alternatives to address your debt.

Summary & Key Takeaways

• Do not pay off loans to family or friends within 12 months prior to bankruptcy filing as it can be considered a preferential payment.

• Avoid transferring assets out of your name within two years before filing for bankruptcy, as it may be seen as a fraudulent transfer.

• Using credit cards for luxury items or cash advances within 70 to 90 days before bankruptcy can make these specific charges non-dischargeable.