Hire a bankruptcy attorney to help you avoid mistakes on your petition
If you are considering filing for bankruptcy, it can be really tempting to try to do your paperwork yourself. After all, when you’re badly burdened by debt the last thing you want is to take on an additional expense.
However, the fact of the matter is that hiring a bankruptcy attorney is a very good investment. Aside from helping to ensure that you choose the correct type of bankruptcy, that you receive maximum debt relief, and that your petition gets approved as quickly as possible, hiring an attorney can also help protect against the risk of being accused of bankruptcy fraud due to a misunderstanding of the law.
Here are four common bankruptcy filing mistakes that could lead to an allegation of fraud.
Not Including Disputed Debts
It is not uncommon for individuals to have had one or more debts go into collections before filing for bankruptcy. Occasionally, the amounts or even the existence of the debts that the collection company is pursuing may be disputed. It is important to remember that, when filing for bankruptcy, you must disclose ALL debts that any creditor believes they are owed. If you don’t really believe you owe the debt as reported by the creditor, you can list it as “disputed” on your bankruptcy petition, but you must not omit it.
Making Preferential Transfers
In a bankruptcy, the court gets to decide how your various creditors get paid. You do not get to make this decision. If you attempt to repay a particular creditor before filing, this will be seen as giving that creditor an unfair preferential treatment. The bankruptcy court can actually take the payment back and split it between all your creditors. The court can also take back payments or transfers of assets made to friends or relatives too close to your filing date. Unfortunately, many people do not understand the restrictions on transfers made in the 12 months before bankruptcy and end up making decisions that could be viewed as fraud.
Failing to Disclose All Assets
Failing to disclose all your cash, investments, property, and assets is the most common type of bankruptcy fraud. While in most cases this is done deliberately, occasionally someone may honestly forget about a retirement account or ancient savings account and inadvertently commit fraud.
Not Mentioning Assets You Expect to Receive After Filing
One final error that can lead to bankruptcy fraud accusations is forgetting to list any assets that you may be expecting to receive soon after your filing. Examples might include a lawsuit settlement, an inheritance, or a pension.
Now You May Wonder…
…What Do I Do If I Made a Mistake on My Bankruptcy Petition?
If you have made a few honest mistakes on your bankruptcy petition, it is likely you will be able to correct it without penalty. You will just need to convince the bankruptcy trustee that you really did not intend to file an inaccurate or incomplete petition. However, considering that jail time and huge fines could be at stake if you are formally charged with fraud, it would be wise to hire a bankruptcy attorney to help you correct your mistakes.
Better yet, hire an attorney BEFORE you file your petition. California Bankruptcy Relief is here to help at 951-755-1000.
