Mistakes Made in a Chapter 7 Case
Joliet Illinois Bankruptcy Lawyers & Attorneys
Dave Siegel: Sure. Let me tell you about a couple of mistakes that people make though when theyre in debt. And so for our viewing audience they dont make the same mistakes. You dont want to run up credit cards in contemplation of filing bankruptcy.
Jesse Barrientes: Oh, why not? If you said I could be able to discharge all this debt. Im a prime candidate. Hey, you know what I think I want to do? I think I like that nice commercial kitchen stuff and I think I want some of that stainless steel utensils and also the refrigerator freezer. Because I think that would be really nice. Especially if Im not going to have to pay for it.
Dave Siegel: I think you have all that, dont you?
Jesse Barrientes: Oh, well.
Dave Siegel: Well, heres the deal. Bankruptcy is for an honest debtor. So if you are running up your credit cards knowing youre going to be filing bankruptcy, its tantamount to fraud. And what the creditor will do is theyll come in to court and try to hold recent purchases non-dischargeable.
Jesse Barrientes: How recent?
Dave Siegel: Well, typically theres a 90 day presumption period. If you used your credit cards within three months of filing, the credit card company has the benefit of that debt presumed to be non-dischargeable. Now you can always rebut that presumption if you can show that you didnt do it fraudulently, but its kind of obvious if the run up is so close to filing and you purchased luxury items like plasma TVs, jewelry, big vacations.
Jesse Barrientes: Like the stuff in your house! [Laughter]
Dave Siegel: I dont have any of that. I dont have any of that. I live a meager means, Jesse.
Jesse Barrientes: Okay, Dave. Well, hey. If you kind of look at those kinds of things. Well, you know were here in January. We just passed the holiday season here so say in December Ive charged some things for Christmas presents because I bought you a plasma television. Alright? And okay, now its January, Februar, March. So what youre really saying is that there is that 30 day time period. And a lot of people do that. Not for an honest
Dave Siegel: It comes down to your intent. Buying a gift like that so close ot filing? Knowing youre already in debt? Its not a good thing to do. Again
Jesse Barrientes: And thats different than opposed to maybe groceries.
Dave Siegel: Of course. Those are necessities. Paying your utility bills with a credit card to keep your gas on, to keep your electric on.
Jesse Barrientes: Paying the mortgage maybe?
Dave Siegel: Paying the mortgage as well, yeah.
Jesse Barrientes: Or the rent or anything like that.
Dave Siegel: Yes. One of the things that people should not do, and they do this a lot unfortunately, is they drain their retirement account. Either a 401K, IRA, pension or other kind of retirement account
Jesse Barrientes: Oh, to pay off the credit cards to stay afloat a little while longer. Why shouldnt I do that?
Dave Siegel: Yes. And what winds up happening Jesse is that they wind up coming to see me after theyve already exhausted all, or a great portion of their pension or profit sharing, and then they file bankruptcy. They could have protected 100 percent of those retirement benefits. They didnt have to touch them. They could have filed bankruptcy and still had all that money in their retirement and they would have been better off. Because all they do is drain it now. They file bankruptcy anyway and theres nothing to retire on. So, you know, its good to talk to a professional before you make any drastic moves. And pulling something out of your 401K to pay Discover card is not a good idea if youre going to be filing a bankruptcy shortly thereafter.
Back to Joliet Illinois Bankruptcy Lawyers & Attorneys
Chapter 7
What’s needed to file a Chapter 7 case?
Stay on creditors during a Chapter 7 case
Mistakes made in a Chapter 7 case
Listing creditors in a Chapter 7 case
Credit counseling classes in a Chapter 7 case
Notice to creditors in a Chapter 7 case
There is life after bankruptcy
Chapter 13
Saving your home with a Chapter 13
Stopping a sheriff sale using Chapter 13
Converting to a different chapter from Chapter 13
