There are many reasons why people file for bankruptcy. From credit card debt, to loss of income, to a divorce—bankruptcy is a way to get back on your feet. When it comes to bankruptcy in New Jersey, avoid these common mistakes to prevent unnecessary complications.
When it comes to bankruptcy, you’re not going fool the court or cleverly hide your assets. Millions of people have filed bankruptcy and the legal system has seen and heard it all. There is a 100% chance you will cause more harm than good if you attempt to pull a fast one.
Disclose Everything to Your Attorney
Without a doubt, this is one of the most important aspects that many people tend to overlook. The reason you hired a bankruptcy attorney is to help guide you through the New Jersey bankruptcy process. As such, you need to disclose everything regarding your income, assets and financial status.
The advice you receive from your counsel is based upon the particulars of your unique financial situation. If you’re withholding information, it could come back to bite you at a later point in time. You should also be aware that the bankruptcy process requires you to disclose everything to the court. This includes your assets, debts, income, creditors and even multiple prior years of financial history prior to the bankruptcy filing.
Do Not Repay Relatives or Insiders
In the eyes of the court, your relatives don’t have special legal status above your other creditors. Prior to filing New Jersey bankruptcy, do not repay any loans your relatives may have given you. Otherwise, the bankruptcy trustee can come after your relative in pursuit of the money you paid them. The court may order repayment of the money to your bankruptcy trustee. The trustee will then redistribute those monies to other creditors.
An “insider” is considered to be a friend, business associate or a creditor with whom you might a favorable relationship. You can’t pick and choose who gets paid off first. There is a very specific order of priorities set forth in the Bankruptcy Code. This establishes the order in which your creditors get paid. Also, it is the responsibility of the case trustee to manage the disbursements.
Do Not Incur Any Additional Debt
Once you have made up your mind to file for bankruptcy, you should stop using your credit cards altogether. Do not incur any additional debt that you don’t intend to repay in full. If you continue to use your credit cards within the 90 days prior to the filing of your bankruptcy petition, the court may deny your right to cancel the debt in bankruptcy. Worse, they could view it as a criminal matter.
Don’t Pull Money from Retirement Accounts
Retirement funds usually are protected in bankruptcy procedures. The court may allow you to discharge your debt without coming after your retirement fund. Avoid touching those monies unless it’s absolutely necessary. The court recognizes that a retirement fund is there to help you live once you retire.
Don’t Transfer Property
Transferring property out of your name will not prevent the trustee from taking it from you – or from the transferee. If you transferred property to a relative, the trustee will come after the relative to gain possession of the property. It’s best to not transfer anything out of your name, prior to getting legal advice.
Schedule a Free Consultation with a New Jersey Bankruptcy Attorney
When it comes time to file for bankruptcy, you need a compassionate and skilled attorney. The attorney will guide you through the process as cleanly as possible. The attorneys at Lucid Law can help you file Chapter 7, Chapter 11, and Chapter 13 bankruptcy in New Jersey. We will be there every step to make sure that you avoid these common mistakes. Give us a call at 908-350-7505 to schedule a free consultation.