This is Omaha and Lincoln Bankruptcy Attorney
Burke Smith with a list of the Top 10 Mistakes that I’ve seen with people or filing bankruptcy
this mistakes they make before they file their bankruptcy case. One of the big ones is paying a relative,
a friend, family member somebody that’s considered an insider, the debts that that person owes
before they file bankruptcy. It’s done with the best of intentions. Person’s gonna file bankruptcy get rid of
their debts and they want to make sure that their mother, their brother, a good friend
at work that they owe some money to is paid before they file bankruptcy. That’s a big mistake. That’s called a “Preference Payment” and
you’re basically preferring your friend, family member over your other creditors and the trustee
can go after that money and if you can’t pay it back the trustee will and can go after
the person that you paid that money to and recover it and that makes for a bad situation
for everybody involved. So don’t pay any of the debts that you owe
to any one particular creditor before you file bankruptcy. Another problem or mistake people make before
they file bankruptcy is using their retirement funds to pay debts that they owe in attempting
to pay them off and not maybe not have to file bankruptcy. Hopefully you haven’t done this yet and if
you haven’t please protect your retirement funds, your 401K, your IRA, other retirement
types of accounts. Those funds are used in for your retirement,
treat them as special that are protected from your creditors so even if you don’t file bankruptcy
and there’s a lawsuit filed against you for a debt, creditors cannot touch those tax-advantaged
retirement accounts. So protect them, that’s a benefit that the
law has given you use it to the utmost and protect those the funds. Another related mistake people make is that
they want to keep a particular credit card when they file bankruptcy and they want to
protect it and so they they maybe pay that off before they file bankruptcy now this is
not an Insider it’s not a friend or family member but it is a preference payment and
that is something that the creditor or the trustee can also go after and recover. The other mistake that’s actually maybe the
other situation that’s related to that is paying off a particular credit card whether
it’s Nebraska Furniture Mart or Best Buy or some other credit card is no guarantee that
that account is going to stay open for you. Even if you have credit card or a credit account
with no balance if you file bankruptcy there’s a good chance that that account will be closed
by the credit issuer. They’re protecting themselves there and
when they see that you have filed bankruptcy and credit card companies creditors have access
to all sorts of information and if you file bankruptcy they’re gonna know about it, there’s
a really good chance that accounts going to be closed anyway and so you’re really wasting
your money by paying off particular debts like that before you file bankruptcy. Another more serious issue or something that
can have much more serious consequences is hiding assets before you file bankruptcy. This might be transferring a car to a relative
or a friend transferring the title and not listing it on your schedules because you no
longer own that item. The Bankruptcy Code is designed to help you,
the debtor but it’s also designed to protect creditors that you owe money to and any transfers
of property such as transferring title to any type of asset before you file bankruptcy
is prohibited and it goes back at least two years sometimes farther. So you definitely don’t want to play games
in trying to protect property that you own before you file bankruptcy. So no transfer of property before you file. Another mistake people make is not seeking
legal advice before filing bankruptcy. There are many nuances. There’s many particular situations that arise
that can be dealt with but without having a proper understanding of how bankruptcy works
and what some of those issues are. It can lead to really bad results if you don’t
seek proper legal counsel. Most attorneys don’t work in the bankruptcy
area unless they do so on a regular consistent basis. The law is very complex in many consequences
can happen unforeseen consequences unless you’re very familiar with the ins and outs
of the Bankruptcy Code in case law and the local practice rules in that where you live. So getting proper legal advice makes a lot
of sense and it is not recommended to do this on your own. Another problem that I’ve seen is people taking
their friend’s advice or their family’s advice over that of their attorney. Even after filing bankruptcy, sometimes people
will talk with a relative or a friend that’s gone through the process before and in their
circumstance they treated we’re able to handle a situation in a particular way. Perhaps their bankruptcy attorney has told
them no you need to handle it in the way that I’ve laid out. They take their friend’s advice over their
attorneys and that can be a very serious consequence if you have a question about your case and
you feel that it’s something that’s important and your attorney has told you about it, ask
him about it again. That’s why you would hire an attorney and
my clients I always take their questions seriously and if something comes up that they received
different advice in the past or from a friend or relative I’ll take that into account, look
into the situation and give them my opinion as to how they should proceed. Another problem that can come up and can be
a it can be a big issue is not doing a proper credit check before you file bankruptcy and
knowing who all of your creditors are. If you don’t list all of the creditors that
you owe money to on your bankruptcy, that can lead to some serious problems down the
road. Under most circumstances it’s okay and you
might be able to go back later and open up the bankruptcy case and add them but it’s
preferred and it’s much safer and better if you list all of the creditors that you owe
money to. If there’s a chance that somebody’s not listed
properly and you go through the bankruptcy process and it’s the case is closed, if one
of your creditors has not been given notice that you filed bankruptcy, they have an argument
that their debt should not be discharged. Obviously the higher the debt and is the more
serious the consequence. So it really makes sense to do a thorough
check and to make sure you’ve listed all of the debts that you owe on your bankruptcy
case.  Another problem to look out for is buying
luxury items on credit before you file bankruptcy. That’s kind of common sense but it’s actually
in it’s so much so the common sense that it’s written into the code that if you purchase
luxury items we’re talking clothes, high-tech equipment etc. before you file bankruptcy
those items can be held out of the bankruptcy and not discharged. So if you’re thinking about filing bankruptcy
as soon as that becomes a real possibility for you, don’t buy any more assets or don’t
buy any more items of property on credit that could be construed as being luxury items. Along with that is not taking any cash advances
or getting payday loans and then filing bankruptcy within a very short amount of time, those
types of debts can also be with be withheld from a discharge and it can cause problems
in your bankruptcy. So as soon as you have a feeling and knowing
that you’re going to be filing bankruptcy, don’t be using the credit card don’t be taking
cash advances. If you have a question as to any of those
particular issues as to what debts might not be included in bankruptcy it really makes
sense to talk to an attorney that’s dealt in in the area of bankruptcy immediately and
know what those answers are gonna be before you file. The last item that I’ll mention as far as
the biggest mistake is not filing bankruptcy in a timely manner. One of the biggest comments or the one of
the the comments that I hear the most from my clients after filing bankruptcy is “I wish
I would have done this sooner” and what that means is that they’ve gone through months
usually longer than that sometimes years of trying to deal with debts that really they
had no reasonable chance of paying off in a in a reasonable amount of time and they’ve
drained their savings their retirement accounts they’ve gone through lawsuits and when I tell
them how easy it can be to file a bankruptcy and the positive consequences of getting rid
of that debt and getting a fresh start they normally say “I really wish we would have
known about this beforehand and that we would have filed be filed earlier”. It would have saved them time, it would have
said save them heartache and it would have saved them money. So with those listing of the Top 10 Mistakes
I’ve seen. If you have any questions about that, please
give me a call Burke Smith at 402 718 8865.