Each state permits debtors to exempt property. Some states even have wild card exemptions that can be used on property that might not otherwise be exempt. The problem for attorneys is when the client does not tell them about property. If it is later discovered it is often too late to claim the exemption.
Avoid Loading Up on Credit Card or Other Debt
Courts want us to be able to get a fresh start, so long as we play fair. They do not like it when we go out and do big cash advances or balance transfers, especially within 90 days of filing bankruptcy. Try to keep this to a minimum and be sure you discuss recent credit card use with your attorney.
Know the Limit of Your Tax Refund Exemption
If you have a large tax refund coming you would probably like to keep it. Many clients end up turning at least part of it over to the Court. Discuss anticipated refunds with your attorney so you will know how much if any is at risk.
Avoid Transferring Assets, Don't Give Stuff Away
The Court can reverse these transactions, seize the property and sell it for the benefit of creditors.
Don't Leave Bills Off Your Petition
When you file bankruptcy you do not want to still be stuck with any debt you could easily have scheduled and discharged. Be obsessive compulsive about listing every creditor. Pull a credit report if you are not sure you have all your bills. Try to also list collection agencies, sometimes the original creditor does not cancel the collection so you want to make sure everyone has notice.
Don't Keep Debt You Can Not Afford
This is your chance to get a real fresh start. If it fails, you are stuck for 8 years before you can re-filing Chapter 7. Many people keep homes or cars even though the payment is high and they owe more than the market value. This makes it tough for them to pay their other bills post-bankruptcy and can put them back into a big financial hole.
Avoid Paying Money to Family Before Filing
Courts want all creditors treated fairly. It is not fair to give your mom a large repayment just before you file bankruptcy. The Judge may take that money back from mom and spread it out to other creditors.
Try not to Wait Too Long
It is human nature to avoid unpleasantness. But waiting too long to file bankruptcy can result in bank and wage garnishment, bounced checks, eviction, foreclosure etc. Better to file before any of these bad things happen.
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