Some unscrupulous people try to cheat when it comes to bankruptcy. They think they will try to be clever and manipulate the system. If you are caught trying these sorts of tactics, they may dismiss your petition for bankruptcy, and you could also face criminal charges. This could result in fines of up to $500,000 and five years in jail.
In this article, we will take a look at what can you not do after filing bankruptcies, or immediately before. Living in Texas the bankruptcy extensions are very generous and there is no need to try and cheat the system.
Lying About Your Assets
Filing for Chapter 7 bankruptcy requires you to disclose all your assets. You must also list all your income. This allows the trustee to calculate what capacity you have to pay off your debts. This is part of the "Means test". Trying to manipulate the test is not a good idea as at some stage the trustee is going to have access to all your financial records, and they are skilled at reading this information. They will catch you out and this will result in penalties and the dismissal of your bankruptcy petition which will leave you in a very bad situation.
Not Getting Legal Advice
Bankruptcy law is not easy to understand and trying to avoid the cost of an attorney will typically backfire on you and cost you a great deal more than the savings on legal fees. I understand that at the time you are considering bankruptcy it might not be the best time to pay out legal fees. What is most important when you are filing for bankruptcy is to get the best possible outcome, and an attorney can ensure that you are able to get the best possible deal.
We found some figures for 2017 and only 5% of those representing themselves in bankruptcy proceedings succeeded. The very first thing an attorney can do is advise you on the best form of bankruptcy to file, Chapter 7, or Chapter 13, as this will have a big impact on what you may lose.
Giving Away Assets
Bankruptcy trustees are not stupid. If you try hiding your assets by giving them away to family members so that they can return them at a later date you will be caught. This is a common trick tried by those people that are concerned about losing their car. They give away their car just before filing for bankruptcy so they will not have it sold it is a sure-fire way to lose the car and lose it unnecessarily. In Texas, there is an exemption on the car which allows 100% of the value of the car, which allows each driver to retain one car if they wish.
There are exemptions for most other kinds of property and in Chapter 7 bankruptcy, you are unlikely to lose very much at all anyway. So why put yourself at risk of prosecution when there is no need?
Spending Remaining Balances On Your Credit Cards
Credit card companies, as an unsecured debt, are likely to get very little back, if anything, from what you owe them. They have computerized records of your transactions. If they see a whole load of unusual purchases immediately before they are notified of your bankruptcy, they will know what you were doing. This will result in them challenging the request to eliminate your debts to them. They will instead object and you will have to pay back what you spent. In most cases any purchases made within 89 days of filing for bankruptcy will not be included in the bankruptcy debts, so you are just making matters worse for yourself.
Taking On Debt
Typically, you are not going to wake up one morning and realize you are in debt and should file for bankruptcy. Debt creeps up over a period of time. During that period where bankruptcy is an ever more likely option, it is totally irresponsible. Taking advantage of home equity during this period is not appropriate.
Attending The Credit Counseling Course
Before filing for bankruptcy, you must take a credit counseling course. Unless you do this your petition will not be accepted. After you have filed, you will need to take another course, that is aimed at your situation after the debts are discharged. If you fail to attend this second course then your debts will not be discharged, so do not avoid this course.
Possibility Of Losing Your House
In Chapter 7 bankruptcy, Creditors can still foreclose a property after you file for bankruptcy if you do not make an agreement with the creditor to continue making monthly payments on your loans. In Chapter 13 bankruptcy, you will continue to make payments through the Chapter 13 payment plan.
You Probably Cannot Get A Car Loan Immediately After Bankruptcy
Getting a car loan will probably be extremely hard after you are discharged from bankruptcy. It will remain that way for a substantial period of time. Your immediate task should be to attempt to rebuild your credit after bankruptcy. The best ways of doing this are to:
Stay on top of all bills, do not miss payments
- Get a new credit card. There are special credit builder cards available. Do not miss payments or default.
- Try not to borrow more than you can pay back.
You Will Not Be Able To Get A Mortgage Immediately After Bankruptcy
Similarly, you will almost certainly not be able to get a new mortgage immediately after discharge from bankruptcy. This is probably the most important example of what can you not do after filing bankruptcies. Many people after going through bankruptcy are very wary of getting credit again, but getting some sort of credit that you can easily afford to repay, is the only way to build your credit again. If you do take out an installment loan or get a credit repair credit card, ensure that you pay everything on time and there are never any missed payments., Do not borrow more than you can easily repay.