These tips about bankruptcy seem like common sense, but so often, common sense is uncommon. Not to mention, sometimes the law and sense also part ways, so it's good advice to have knowledgeable experts on your side. Don't just rely on the internet. Find someone who knows the rules in your local area for specific advice about your situation.
Online Info: File for Bankruptcy - 11 Bankruptcy Commandments - 3 of 11
3. Thou shalt not make your situation worse (by giving away what bankruptcy law would let you keep or admitting a debt).
Note: When you consider whether to file for bankruptcy and start online gathering information, after starting your research, feel free to call me, bankruptcy attorney Laura Buchanan, at 323-686-5400 ext. 2 for more information. As of the date of this post, one cannot simply file for bankruptcy online. You need to file papers at the Court. If you use an attorney, they will file electronically for you.
You should determine what assets bankruptcy laws let you keep, and don’t use those assets to pay any of your bills or to secure a loan from anyone if bankruptcy is an option for you. These are the assets our American law says you should be able to keep a basic quality of life that allows you to get on your feet again. Also, after you have initially incurred a debt, don’t admit to the creditor that you owe it – a later admission re-starts the clock on how long the creditor can pursue you for it.
Bankruptcy is intended to give you a “fresh start,” but bankruptcy recognizes that human beings need some basic items to start over. You are allowed to “exempt” certain assets/properties that are basic to life for humans in our society. “Exempt” means that the property is not available for distribution to your creditors in bankruptcy, so you get to keep exempt property.
You get to apply the “exemptions” available in your state to your property, and you get to keep the property that is covered by those exemptions. The exemptions include a certain amount of the equity in your home – your “equity” equals the value of the home minus the mortgages you owe; equity in your car; investments in pension and retirement accounts; personal property that you may love but wouldn’t give you much if you sold it on eBay; and certain amounts for other assets.
So, do not borrow against your exempt property! If you borrow against your exempt property by pledging that property to a lender (or withdraw funds from an exempt account), you are needlessly giving away property that you could have kept to get back on your feet after bankruptcy.
Also, you may have to pay penalties for withdrawing exempt funds from a pension, IRA or similar account, which also defeats the purpose of your fresh start. Part of taking responsibility for yourself is realizing that you need to keep your exempt property, which the law says you should keep, so you can start pulling yourself up by your bootstraps.
This is the third Bankruptcy Commandment in this series.
"You may have a fresh start any moment you choose, for this thing we call 'failure' is not the falling down, but the staying down."
Laura Buchanan, Attorney
Richardson | Buchanan, A PROFESSIONAL CORPORATION
Direct: (323) 686-5400 ext. 2
2301 Hyperion Avenue, Suite A
Los Angeles, CA 90027
Richardson Buchanan, A PROFESSIONAL CORPORATION, is a debt relief agency pursuant to Federal Law § 528 of Title 11 of the US Code. We provide legal assistance and help people file for bankruptcy relief under the Bankruptcy Code. The material on our blogs and websites is for informational purposes only and is not intended to be legal advice or a substitute for legal advice with regard to any particular situation or legal proceeding. The transmission or receipt of any information on our blogs or websites will not create or constitute an attorney-client relationship. DO NOT submit confidential information to our website or blog. These are public and will be seen by others. The information on this blog or our website may be characterized as an advertisement.
Information is general and may not address your particular situation. Do not rely solely on this or any information you find on the internet. You should consult relevant professionals directly about your situation.
Lisa Delzompo (951-704-4559)
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Information is deemed reliable but is not guaranteed. Information is general and may not address your particular situation. Do not rely solely on this or any information you find on the internet. You should consult relevant professionals directly about your real estate, financial, etc., situation.