Consumers who are considering filing for bankruptcy may believe they can do it on their own without the help of a bankruptcy attorney. This is can be a risky perception, particularly if you are considering filing Chapter 7 bankruptcy which means your debts are fully eliminated once a discharge is issued.
Here are some of the challenges debtors face if they try to file Chapter 7 bankruptcy without hiring an experienced bankruptcy attorney.
You Could be Putting Your Assets at Risk
When a consumer elects to file Chapter 7 bankruptcy, the trustee will determine whether the debtor has assets that may be liquidated to satisfy all or part of their debts. Since most consumers are unaware of the variety of exemptions offered under the bankruptcy code, they could be risking their home and other assets.
Keep in mind, unsecured creditors generally receive no payment towards debts owed to them if a debtor is filing for bankruptcy. Therefore, it is in their best interest to force liquidation of any assets that are not properly protected by use of exemptions. Consumers are also unaware the way the title to their home is held could also create problems.
An experienced bankruptcy attorney will review your assets and use their working knowledge of the bankruptcy code to ensure you are getting every exemption you are entitled to use. This can help protect your assets from the potential of being liquidated.
You Could Risk a Bankruptcy Fraud Charge
Some consumers believe they can protect their personal property including homes, cars and other items by transferring them to friends and family members prior to filing bankruptcy. These types of actions could create a situation where the bankruptcy trustee and creditor accuse the debtor of fraud.
Transferring property is considered “fraudulent conveyance” and could result in the bankruptcy not being discharged leaving a debtor facing both debt and potential jail time because they are facing fraud charges.
Anyone considering filing bankruptcy needs to contact an experienced bankruptcy attorney and discuss any transfers they are considering ahead of time. While some transfers may be fine, the court may also “claw back” assets that are transferred within a specific period of time before filing Chapter 7 bankruptcy.
You Could Lose Out on Personal Injury Claims
When a person files a personal injury claim because of injuries sustained due to the negligence of a third party, they are anticipating a financial award. This also goes for breach of contract and other civil lawsuits where a debtor could win a monetary settlement.
If a claim has not been previously filed or if a new claim has recently been filed, debtors could be facing “judicial estoppel” which could prevent the civil lawsuit from continuing.
When a debtor works with an experienced bankruptcy attorney, the attorney will ask them about any potential claims for civil lawsuits and help protect them from losing their rights to file a suit and win a settlement.
You Could Lose Other Assets
Some debtors forget to list assets on their schedules including vehicles, homes and other assets which could ultimately mean they will lose those assets. Debtors who exclude jewelry, artwork and other assets from the proper schedule not only risk losing those assets but also could face criminal charges for bankruptcy fraud.
Debtors should always work with an experienced bankruptcy attorney because most of the time you are able to keep all of your assets when you file Chapter 7. It is never a good idea to run the risk of losing your assets or facing criminal charges because you’ve failed to disclose assets.
You Could be Putting Family Members at Risk for Lawsuits
You may have borrowed money from family and friends, particularly if you’ve been having financial problems for a while. If you’ve made large repayments on these amounts, it is possible for the bankruptcy trustee to sue your friends and family to reclaim those payments. These types of repayments are called “preferential payments” and unless you’re working with an experienced bankruptcy attorney you could be putting friends and family members at risk.