Common Mistakes Made That Could Negatively Impact a Potential Bankruptcy

If filing for bankruptcy seems just over the horizon, it’s only natural to be scared. Bankruptcy is a big deal, and can follow you for the rest of your life. When people are afraid, or embarrassed, they often engage in behaviors that are counterproductive. While to err is human, of course, when it comes to bankruptcy, there are a number of common mistakes that could negatively impact your bankruptcy — or in the severest of cases, actually land you in jail.

1. TRANSFERRING ASSETS

The court doesn’t take kindly to people who try to duck bankruptcy laws. Often, this comes in the form of transferring or giving away assets to a child’s name or a relative in an attempt to mask what they have. This is a transparent foolhardy move, and something that is almost impossible to get away with.

2. SELECTIVELY REPAYING LOANS

If you repay a relative or friend in the year prior to filing for bankruptcy, or if you repay any creditor within 90 days of filing, this could be considered a “preferential transfer.” Selectively repaying loans might result in a bankruptcy trustee filing an adversarial proceeding, which would require the person you paid to return the money, so that it could be redistributed those funds equally to your creditors. This might not seem like the biggest deal, but do you really want your bankruptcy trustee to sue your mother? Probably not.

3. CONCEALING OR LYING ABOUT ASSETS

Bankruptcy laws require that you fully disclose all of your assets, which means as a debtor it is your obligation to ensure that all of your assets are accurately reported and fully accounted for. Lying about or concealing assets is a form of bankruptcy fraud, a white-collar crime that “carries a sentence of up to five years in prison, or a fine of up to $250,000, or both. Even just intending to commit bankruptcy fraud may be punishable” [Cornell Law]. The FBI fraud division, IRS auditors, and the U.S. Trustee Program examine all bankruptcy filings. Even if assets are not listed, they will be found, leading to the dismissal of your petition and likely criminal charges.

4. HIDING CREDITORS

Just like how you’re required to disclose all of your assets, you are also required to disclose all of your debts, including, but not limited to: debt on credit cards (zero balance cards aren’t necessary though); charged-off debts, or debts that have been sold to another creditor; debts that involve foreclosures and repossessions, as these may still have outstanding balances. When filing for bankruptcy you absolutely must list out every person or company to which money is owed. You cannot pick and choose creditors.

5. RAIDING YOUR RETIREMENT ACCOUNTS

It might seem like a good idea, but dipping into your 401(k) to pay off some of your debt is unwise. Most retirement accounts are considered protected assets, meaning they’re exempt when you file. Your retirement accounts are your nest egg, and should be left untouched until your golden years — especially since they were never at risk of being seized in the first place. Your future self will thank you.

6. CREDIT CONSOLIDATION

Even if you negotiate lower payments or restructure your debt outside of bankruptcy, your credit score will be adversely affected and you could incur tax liability. Remember, too, that “not-for-profit” doesn’t mean “free.” These organizations are often funded by banks and the credit card industry to try to collect as much money from you as possible.

7. USING CREDIT CARDS PRIOR TO FILING

There are specific rules concerning how much you can charge to a specific creditor and what you can purchase prior to filing a bankruptcy. Failing to comply with these rules could result in a denial of your discharge or a delay in the process. Generally speaking, any charges you make within 90 days of filing are left out of your bankruptcy debts. Meaning, once you come out the other side of bankruptcy proceedings, you’ll still owe your creditors for these charges.

8. BURYING YOUR HEAD IN THE SAND

Waiting too long to file for bankruptcy because it’s scary, or overwhelming, can only lead to more problems in the end. Burying your head in the sand like an ostrich, as inclined as you might be to do so, can can result in wage garnishment, bank levies, and liens on real estate. These are all major headaches!

Strategy is a huge component of a successful bankruptcy. Proper planning and preparation are critical. If you are concerned about debt, don’t delay. Contact someone like me. I offer a free consultation.

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Why Are More Seniors Filing for Bankruptcy?

There’s no hiding it: more and more seniors are filing for bankruptcy. Whether you’re filing for chapter 7 or chapter 13 bankruptcy, there are far too many options and details to consider on your own, which is where a bankruptcy lawyer can be vital. If you’re struggling with finances, or know a senior who is, fully understanding the reasons that seniors are filing for bankruptcy can be an important part of finding the right solution.

Take a look at some of the causes of increased rates of bankruptcy, as well as some options for those struggling with financial hardships.

Bankruptcy Among Seniors

There’s no denying that some seniors have struggled to save a comfortable nest egg for retirement. However, even an adequate retirement fund can be drained far sooner than anticipated due to a variety of factors. Seniors not only struggle with paying their bills, but also with the stigma of financial hardships.

The Consumer Bankruptcy Project makes it clear that the bankruptcy filings of individuals over 65 have increased dramatically in recent years. The amount has increased by five times in recent years, which means there’s a good chance you may already know a senior citizen who is considering or has already filed for bankruptcy.

Your Insurance Safety Net

How confident are you with your insurance protections? Certain safety nets have been shrinking in the past few decades, and insurance premiums have been growing for even senior citizens. An unexpected hospital bill can mean the difference between a comfortable retirement and financial hardship. Insurance premiums and the increase in hospital visits have lead many seniors to seek a trustworthy bankruptcy attorney.

Taking Stock of Your Stocks

The stock market can be a blessing or a curse, particularly for seniors who rely in part on the trends of the market for their retirement fund. While the market has grown since the Great Recession of 2008, your investments might not be performing as well as you expected. Poor investment returns isn’t the only reason many seniors are looking for a bankruptcy lawyer, but it is a significant factor.

Navigating Bankruptcy

Bankruptcy can be devastating, but there is hope. If you or a senior you know is facing a difficult financial situation, consider hiring a bankruptcy attorney to help you navigate this difficult time. There are a number of factors that can lead someone to filing for bankruptcy, and nearly as many options to conduct if you need to file. In order to better understand what’s available to you, an attorney can offer advice and discuss with you all of these the different bankruptcy options. While it might seem like a dark time, bankruptcy can be a hopeful option for either you or your loved ones. Contact Brent George Law today for a Free consultation.

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What You Need to Know About Debt Consolidation and Bankruptcy

Filing for bankruptcy is never anyone’s first choice. There are a number of options to explore before meeting with a bankruptcy lawyer to determine whether it’s the right solution to your circumstances. One of these pre-bankruptcy options is to take out a debt consolidation loan.

What is Debt Consolidation?

Debt consolidation is the combination of several unsecured debts—payday loans, credit cards, medical bills—into one monthly bill with the illusion of a lower interest rate, lower monthly payment and simplified debt relief plan.

Unfortunately debt consolidation promises one thing but often delivers another. That’s why dishonest companies that promote too-good-to-be-true debt relief programs continue to rank as the top consumer complaint received by the Federal Trade Commission.

The debt consolidation loan interest rate is usually set at the discretion of the lender or creditor and depends on your past payment behavior and credit score. Even if you qualify for a loan with low interest, there’s no guarantee the rate will stay low. Lower interest rates on debt consolidation loans can change. This specifically applies to consolidating debt through credit card balance transfers. The enticingly low interest rate is usually an introductory promotion and applies for a certain period of time only. The rate will go up over time.

Consolidating your bills means you’ll be in debt longer. In almost every case, you’ll have lower payments because the term of your loan is prolonged. Extended terms mean extended payments. Your goal should be to get out of debt as fast as you can! Debt consolidation doesn’t mean debt elimination. You are only restructuring your debt, not eliminating it.

Can You Still File for Bankruptcy?

In some cases, debt consolidation isn’t effective enough and bankruptcy is the best option. First, you should understand that there are two types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 uses your nonexempt assets to pay your creditors, either in full or partially, depending on your assets. You are able to keep your exempt property and any remaining debt will be erased. Similar to debt consolidation, Chapter 13 establishes a new debt payment plan based on your income and is often used by those with a degree of disposable income to avoid losing assets.

A debt consolidation loan will be treated as unsecured, which means you can have it discharged like other debt. To that end, you should consult with a bankruptcy lawyer to see if filing for Chapter 7 bankruptcy is best for your financial situation and to avoid having your debt considered “bad faith.” This implies you had no intention of paying off your debt and may prevent a bankruptcy discharge.

The decision to file for bankruptcy doesn’t come easily and can be confusing and complicated. That’s why it’s vital to have an experienced bankruptcy lawyer you can trust. Contact the Brent George Law Office today to get started.

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What the Recent Drop in Bankruptcy Filings Really Means

Since long before the 2008 economic crisis was even a twinkle in Wall Street’s eye, the hardships of bankruptcy have plagued both individuals and businesses alike. While the right bankruptcy lawyer from an established firm, such a Brent George Law, can make all the difference in a filing, it will always be a difficult and stressful life event. This is why the recent news of a four percent drop in bankruptcy filings shines brightly as a beacon of hope for many.

How Significant is a 4 Percent Drop?

Based on data originally reported by Epiq (formerly Epiq Systems), a legal services industry leader, findings show that as of May 2018, the total number of all U.S. bankruptcy filings was 67,307—a figure that clocks in at 2,425 fewer filings (or 4%) than the 69,732 cases filed in May 2017.

  • Consumer bankruptcy filings experienced a 3% drop, from 66,057 in last year to 63,982 this year.
  • Commercial bankruptcy filings decreased by a healthy 10% year-over-year, down to 3,325 from 2017’s total of 3,675.
  • Total commercial Chapter 11 filings reported the most extreme change, falling to 447 cases total from last May’s 579, a remarkable decline of 23%.

Will Filings Continue to Drop?

There is no way to predict the future of bankruptcy filings, and a bankruptcy lawyer should always be consulted on a case-by-case basis. That being said, these findings must be viewed through a critical lens that takes into account all filings, not solely the difference between the same months, one year apart. That 10% drop in commercial filings also happens to be a 2% increase from April 2018, and the impressive 23% decrease in commercial Chapter 11 filings includes 14 more cases than that of the previous month.

Are Any Steps Being Taken to Combat Bankruptcy?

American Bankruptcy Institute (ABI) executive director Samuel Gerdano warns that many businesses and families are still experiencing financial pressure, due to the steady increase in borrowing costs and its role in overall debt. In light of this, ABI has doggedly supported two initiatives that will help unburden struggling businesses and individuals:

Making the decision to file for bankruptcy is hard, finding the right bankruptcy lawyer shouldn’t be. If you want to learn more about your options or believe filing for bankruptcy is right for you, contact the Brent George Law Office today and take the first step to a fresh start.

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What You Need to Know About Filing for Bankruptcy in California

While bankruptcy laws are governed by federal statutes, they are implemented on a state level. Each state may have its own regulations concerning bankruptcy procedures, which is why it is important to work with a bankruptcy lawyer who understands California’s state requirements.

The following will give you a better understanding of how bankruptcy works in the Golden State.

The Types of Bankruptcy

When people are in debt over their heads, they may consider bankruptcy as a financial reset—a way to get a break from their creditors, reorganize their finances, and start again to build credit.

Filing for bankruptcy can give people breathing room, but it doesn’t wipe the slate clean. Instead, you may get some debt relief while consolidating other expenses to prioritize your repayments.

Here’s a rundown of the four main types of bankruptcy and their basic differences:

  1. Chapter 7: Also referred to as “straight bankruptcy,” this type may require you to give up some of your property to remove some of your debt. This might not be the right option for property owners wishing to retain their homes or other assets.
  2. Chapter 11: This type of bankruptcy is favored by businesses who want to remain in operation while restructuring their debt. Individuals with very large debt may also file for Chapter 11.
  3. Chapter 12: Family farmers may be protected from losing their property when they file for this kind of bankruptcy. They may reorganize to a payment plan that is approved by the court, allowing them to continue to operate their farms while repaying what they owe.
  4. Chapter 13: This form is for individuals who have income and assets such as a home or car, and can make payments if their debt is consolidated, reduced, or restructured.

California-specific Rules

Bankruptcy law in California is unique, compared to other states. Here are a few regulations the were put into place in the Golden State.

  1. Exemptions: Your home and any equity you have in your home may be exempt, which means you may be able to file for bankruptcy while retaining your homestead
  2. Community property: Because California mandates that property is owned by both spouses in a marriage, when filing jointly for Chapter 7 (for example), the state will consider all property to be part of the estate and therefore subject to bankruptcy proceedings.
  3. Foreclosure: As a non-recourse state, California law provides that lenders may collect either the home or the collateral as repayment, but not both.

The above information provides a basic understanding of how bankruptcy works, but if you are still confused, you should consult with a California bankruptcy lawyer who is experienced in your situation. You can schedule a consultation online with the law offices of Brent D. George to learn more about your options or call them now at (805)494-8400.

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Assets You Should Not Transfer Prior to Bankruptcy

Though the stigma it once had has all but disappeared, bankruptcy can still leave debtors making desperate moves in a last ditch effort to protect their assets. Unfortunately, as any proper bankruptcy lawyer will tell you, moving assets prior to filing for bankruptcy could end up causing you even more trouble.Here are three types of assets you should avoid transferring prior to filing for bankruptcy.

Real Estate and Personal Bank Accounts

Many bankruptcy filers will try to place their bank accounts and property assets in the name of family and friends. It might seem to you like a creative, harmless way to protect everything you’ve worked for, but to creditors ready to seize these assets or file a lawsuit, it’s a transparent attempt to manipulate the system and weasel out if paying what you owe.

If you do transfer these assets just before filing for bankruptcy, know that creditors and bankruptcy trustees have the power to challenge the asset transfer and mandate the return of your assets to the bankruptcy estate.

Retirement Accounts

Similar to real estate and bank account assets, placing what money you have left into a retirement account is viewed as a big red flag to bankruptcy trustees. If a bankruptcy trustee catches wind of you suddenly transferring large amounts of money to a retirement account, they have the power to void these transactions, too, as they’re usually viewed as a sign of you trying avoid paying creditors.

Of course, if you’d already been making regular payments to a standard retirement account for several years prior, a bankruptcy trustee won’t void your payments simply due to bankruptcy. As long as you’re conscious of your monthly retirement account contribution before, during, and after filing for bankruptcy, you have nothing to worry about.

Creditor Payments

Sometimes debtors will try to overpay or prepay certain creditors in yet another creative attempt to dodge the financial requests of bankruptcy trustees or other creditors. There are some instances when prepayment is allowed, such as in payments made towards one’s mortgage, given that not doing so could result in you being displaced in the future.

However, if you owed money to family and friends, for example, and attempted to pay them back in large sums right before filing, the bankruptcy trustee can classify these payments as preferential treatment and once again void them. Make sure to speak to your bankruptcy lawyer before making any payments to certain creditors.

If you need assistance with or have questions about filing for bankruptcy, Brent George Law is here to help. Give us a call at 805-494-8400 or visit our contact page. Our first consultation is free of charge.

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Changes in Policy May Make Declaring Bankruptcy on Student Loans Possible

Despite what many students would likely prefer, at this moment it is all but impossible to include and have your student debt forgiven when filing for bankruptcy. To understand how massive this problem is, you should know that about 40% of those borrowing student loans will find themselves in default within the next five years. That’s a pretty extreme number; even more so when you consider that student loan borrowers currently owe almost $1.5 trillion.

Current State of Student Loan Bankruptcy Options

Right now, while it is technically possible to discharge student loans during bankruptcy, actually doing so is a complicated undertaking. There are three steps involved in the process, with the first being relatively standard: the person seeking bankruptcy needs to choose and hire a lawyer.

After that, the individual will need to determine precisely what type of bankruptcy they would like to pursue. Both of these steps are typical for anyone seeking to fine for bankruptcy, whether student loans are included or not.

The third step is the problem area. The person who is looking to file for bankruptcy must prove that they are facing undue financial hardship.

The reason this is complicated is because there is no universal definition of what undue hardship is. In fact, there is still no real consensus on what it even means. Proving something without an explicit definition is a challenging task, which is why student loans are typically not forgiven during bankruptcy.

Potential Changes to Definition

Currently, the Department of Education is working out how undue hardship should be defined. As it stands, the most common way to show undue hardship is to prove you do not have enough money to pay your loans. You also must prove that this inability will continue throughout a significant portion of the repayment period.

Some advocates for the inclusion of student loans in bankruptcy have suggested that there should be precise criteria for determining who qualifies. This might include having a disability related to military service, or being eligible to receive social security.

Recent testimony by the Chairman of the Federal Reserve, Jerome Powell, contained comments pertaining to the current state of loan debt and a borrower’s inability to discharge during bankruptcy. Most notably, he explained that individuals who are unable to pay off loans will see adverse effects on their credit ratings, and long-term negative impacts felt throughout their financial futures.

If you are curious about your rights when it comes to bankruptcy, Brent George Law in Thousand Oaks will happily provide you with a free consultation.

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How to Rebound from Bankruptcy

Filing for bankruptcy has become commonplace in the United States in the last several years. While it is not something anyone is eager to do, it does not carry the stigma it once did. Although this is often the best option to wipe the slate clean and move forward, your credit rating will take a nosedive.

Even though it may not have been the greatest before bankruptcy, this new addition can hinder your ability to get an auto loan, credit cards or mortgage for up to ten years. Working with a local bankruptcy lawyer can help you understand the ramifications and decide if this is the right choice for you. Once Chapter 7 or 13 has been filed and discharged, there are several steps you can take to begin rebuilding your credit.

Take a Breath and Regroup

Now that some of the weight of those finances has been lifted from your shoulders, the emotional impact of the discharge may hit. Throughout the process, most people don’t realize the how their life can change. There may be some disappointment and shame mixed in with the reality of rebuilding credit from the ground up. Take some time to reflect on what choices contributed to the situation and learn from them. Surround yourself with people who support you and can help you deal and healthily cope with the upcoming challenges.

Embrace a No-Frills Lifestyle

Depending on the type of discharge, the court may dictate that certain assets be sold to satisfy creditors. There may also be existing debts that have a specific payoff period, typically three to five years, designated by the court. As a result, frugality may be necessary. Downsized living quarters and tighter grocery and other spending budgets may be required. The Law Offices of Brent George can help you create a plan that meets the discharge requirements yet still allows you to move forward financially.

Rebuild Your Credit

Although it may be difficult in the beginning to rebuild your credit, it’s not impossible. Start with a secured credit card. Take some time to find one that has good rates and doesn’t report to the credit bureaus that it’s secured. Pay the bills that you have on time to show that you can be financially responsible. If you need to get a car or take out a loan, shop for lenders. You may be surprised at the options available.

Bankruptcy was designed to provide individuals and organizations a way to discharge some of their debts and start again fresh. With offices in both Oxnard and Thousand Oaks, The Law Offices of Brent George is an accessible resource that can walk you through the best options for your personal situation to get out of the clutches of debt and begin rebuilding your life.

Please explore our website, and reach out to us for any questions. Our first consultation is free!

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How Do Businesses Go Bankrupt?

The financial crisis between 2007 and 2008 saw many businesses file for bankruptcy. However, hundreds of companies file every year for a litany of reasons. As a precaution, it is worth it for any entrepreneur to speak to a bankruptcy lawyer well before the risk of filing is on the horizon, just to become familiar with the risks and also how to avoid going bankrupt. Consider it as part of an investment for the ‘health’ of your business.

Lack of Viability

A lack of viability is a sure way to struggle with your business. Part of ensuring viability involves making sure people want your product or service over a long period of time. Many businesses fail because they are entering an oversaturated market and there is too much competition. Every business needs to find a niche or a unique take on their product or service. If you open a small clothing store, then you need to offer consumers something they will not get by going to Target or Wal-Mart. Additionally, some businesses are based around an idea that is simply poorly thought out. Before starting any business, you should ask yourself what problem your company solves, and how is it different or better than the next guy.

Lack of Liquidity

In the event your company requires an influx of cash, the easiest thing you can do is sell off an asset. A bankruptcy lawyer can look at the assets you have acquired over the years and determine what would be best to turn into cash. This can include equipment, property, or even labor. A company may even need to sell excess inventory to pay employees’ paychecks.

Poor Leadership

When you run a business, you want to bring on other people to help you make important decisions. Candidates and employees should be carefully vetted so that you know you are only bringing on the best. You want to hire people who know how to make hard decisions, know how to prioritize, and are able to inspire employees.

No Solvency

Solvency is similar to liquidity, but it is more closely related to the debts a company needs to repay. Every business will require a loan at one point or another, but it needs to pay off this loan in a timely fashion with interest. You should be able to make loan payments on time while still being able to keep the business operational. Identify your “current ratio.” This is the rate of current assets, such as inventory, supplies and receivables, compared to current liabilities, which include monthly payments, payroll taxes and debts. Ideally, you want a current ratio of 2:1.

There are a number of ways businesses can lose revenue to an extreme degree. If your business seems to be inching toward this downward trend, then it would be wise to consult a bankruptcy lawyer to review your options.

The Law Offices of Brent D. George are here to help. Feel free to contact us – our first consultation is free.

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Should You File for Bankruptcy After the Holidays?

The decision of whether or not to file for bankruptcy is always a stressful one, but when you have to make it around the holidays, it’s even worse. You might be wondering whether it’s better to just get it over with or if there are smart reasons to wait until after. While consulting with experts such as Brent George Law in person is probably your best bet, here are some of the things that will need to be considered.

Income
There are two types of bankruptcy, Chapter 7 and Chapter 13. In order to determine which you are eligible for, your income for the six calendar months prior to filing will be taken into consideration. This means that if you file in December, Christmas or end of year bonuses will not be included. This is true whether the bonuses are in the form of check or cash. If you wait until after the holidays, then this additional income will be included in your income determination.

Holiday Expenses
No matter how poorly you’re doing financially, you’re probably going to be spending some money on gifts. According to the laws surrounding bankruptcy, anything you purchase within three months before or three months after the Christmas holiday cannot be included in the bankruptcy filing, meaning it is debt that won’t be forgiven. Whether you pay that debt off immediately or agree to a payment plan, you must pay for these debts unless the purchases during these months were for things you legitimately needed.

Taxes
Income tax is another area to consider when deciding when to file for bankruptcy. The IRS always gets paid eventually, no matter what type of bankruptcy you file. If you’re filing Chapter 7 bankruptcy and you have no assets, you’ll have to make a payment plan with the IRS. If you do have assets, then they can be sold off to pay your debts, of which that owed to the IRS comes first. If filing a Chapter 13 bankruptcy, you’ll likely want to do it after taxes are due. Among the benefits to this are that you will be able to pay off other debts first and you will avoid penalties and interest added during your case.

There are much more intricate details that you will want to think about when determining when you should file for bankruptcy, but these are a few of the key items to bear in mind when making the decision around holiday time. Because of the complexity and fine legal print involved, meeting with a specialist in bankruptcy like Brent George Law can help you decide if you are a good candidate for filing and when the best time to do so would be.

Don’t hesitate to give us a call if you have any questions – our first consultation is free!

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