The federal bankruptcy process is chock full of hidden mines that can blow your case right out of the water. Most of these problem areas can be avoided with careful planning and pre-bankruptcy investigation. When a problem occurs in a bankruptcy case, it is often because the client has rushed into bankruptcy to avoid a situation that is irreversible, like a repossession, garnishment, or foreclosure. Waiting until the last minute to consult with a bankruptcy attorney has the potential to create huge problems.
When a client needs to file a bankruptcy quickly, the attorney relies heavily on the client to provide complete and accurate financial information. In most cases documents are available like tax records, bank statement, deeds, titles, etc. In some cases the client is not able to obtain those important records. To compound the issue, sometimes financial transactions are forgotten or overlooked.
“Mistakes” in hastily-filed bankruptcy cases can lead to big problems. For instance, a debtor who rushes into bankruptcy may overlook a recent financial transaction that involved a family member; forget an employment bonus that was paid or that is owed; or may under-estimate an income tax refund. Money or property transfers to family can be avoided by the bankruptcy trustee, in some cases up to two years before the bankruptcy filing! That can cause you and your family serious headaches. Under-reporting income can disqualify the debtor from Chapter 7 bankruptcy and can force a Chapter 13 plan to skyrocket, whether you can afford the payments or not. Losing an income tax refund creates a great financial burden for a family going through bankruptcy.
Many bankruptcy mistakes can be avoided by consulting a bankruptcy attorney early. Preparing a bankruptcy petition does not take long, but your attorney needs time to analyze your case, review your financial documents, and ask the right questions to avoid problems with your case.
If you are facing foreclosure, garnishment, or repossession, contact an experienced bankruptcy attorney immediately and discuss your options. While bankruptcy is not always the best choice, your attorney can discuss the many federal and state laws available to help you resolve your financial dilemma. Speak to a qualified attorney early, because time can be your enemy.