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Spend With Caution Before Filing for Bankruptcy

Spend With Caution Before Filing for Bankruptcy
"""Congress amended the US Bankruptcy Code in 2005 because it believed there were too many fraudulent bankruptcy filings. Some individuals are guilty of charging up their credit cards prior to registering for bankruptcy to eliminate all debt. After receiving a bankruptcy discharge, they would reapply for credit and start over. Therefore, Congress made Chapter 7 filings more difficult and increased the duration between bankruptcy filings.

Everyone who files Chapter 7 or Chapter 13 bankruptcy must now attend the 341 meeting, or meeting of creditors. This meeting typically occurs four to six weeks after the bankruptcy filing. A debtor must be cautious when responding to the bankruptcy trustee so that he or she is not assumed to have racked up debt and emptied their bank accounts in order to file for bankruptcy. If the bankruptcy trustee suspects this during the meeting, they will refer to section 727(a)(2) of the bankruptcy code. This section of the insolvency legislation states:

The court shall grant the debtor a discharge unless, within one year prior to the filing of the petition, the debtor has transferred, removed, destroyed, mutilated, or concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed, property of the debtor with the intent to hinder, delay, or defraud a creditor or an officer of the estate charged with custody of property under this title.

Therefore, it is prohibited to empty your bank accounts prior to registering for bankruptcy. Do not assume that the bankruptcy trustee does not consider this in evaluating each bankruptcy filing. Frequently, the trustee in bankruptcy will request up to two years of bank statements. If the trustee of the chapter 7 bankruptcy believes that the debtor did this on purpose, there is a good possibility that the debtor will not receive a discharge.

This is a significant reason to be represented by a bankruptcy attorney during the petition process. A bankruptcy attorney will advise the customer on bankruptcy's dos and don'ts, preventing them from making an idiotic error. The attorney will also be able to provide guidance on permissible spending levels that raise red flags. Obviously, a debtor will need to purchase food and clothing prior to filing for bankruptcy, as they must consume and dress themselves. If this is consistent with the debtor's lifetime spending pattern, the trustee will conclude that the debtor had no intent to defraud the creditors. If a client behaves irresponsibly, the bankruptcy attorney may advise the debtor to delay filing for bankruptcy until some time has passed.

When filing for bankruptcy, it is of the utmost significance to be truthful with the bankruptcy trustee; otherwise, it could bite you back. A bankruptcy attorney's assistance in avoiding potential hazards can be invaluable. Possessing the knowledge to prevent you from making errors prior to filing for bankruptcy can facilitate a smooth bankruptcy filing and discharge.""

" - https://www.affordablecebu.com/
 

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"Spend With Caution Before Filing for Bankruptcy" was written by Mary under the Finance / Wealth category. It has been read 159 times and generated 0 comments. The article was created on and updated on 01 June 2023.
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