In the third and final part of this series, we continue to examine problems that one can avoid when preparing to file a bankruptcy case.
18. When preparing to meet with an attorney or, having retained an attorney and preparing your worksheets, don’t forget to list any debts that you may owe to family, friends or other people who are considered insiders. Frequently, our families have helped us along the way to get through periods of financial difficulty. In many cases, monies received from family and friends are not actually debts that need to be repaid, but rather can be considered gifts, and do not need to be repaid. If this is the case, then the money received from the family or friend does not need to be listed as a debt. On the other hand, there are many situations where we have borrowed money from family and there is the expectation that it is to be repaid. In fact, the amount repaid to family or friends is treated in a special way and it definitely should be discussed with your attorney to avoid unpleasant surprises in your bankruptcy.
19. While checks which you may have written which are returned for insufficient funds can be discharged in bankruptcy, it is unwise to go out and write bad checks. In many cases this could be a criminal offense.
20. When preparing to see a bankruptcy attorney to discuss filing, or, after hiring the bankruptcy attorney to prepare your case, is unwise to borrow money with the intent to discharge the debt in your bankruptcy. This could be considered bankruptcy fraud and the creditor can file a request with the court that the debt not be discharged and that you be ordered to repay it.
21. Consider carefully whether there might be liens on your property. You might have been sued at some time in the past by creditor who is not attempting to collect the debt. Frequently, we forget about these issues, out of sight, out of mind. However, it is important that the attorney know about any liens which you may have on your property. Often, these can be removed as part of the bankruptcy process. However, your attorney will not know that this needs to be done unless you tell him.
22. Don’t make any major financial decisions without discussing them with the attorney. Sometimes it is actually a good idea to purchase a vehicle before filing, but sometimes it can create problems. It is extremely difficult to generalize, so it is wise to discuss any move that you are considering making with the attorney before you take any action.
23. Although it should be understood that you need to be completely honest with your attorney, sometimes it is tempting to stretch the truth or present your situation and a manner which you think might be more helpful to you in the bankruptcy. This may actually backfire. It is always the best policy to tell your attorney the plain and unvarnished truth. I have seen a number of situations where people thought they needed to shade the facts when the truth of the matter is that they had nothing to worry about in the first place.
24. Do not ignore any state court proceedings. Often times people think that when they consult with an attorney or hire the attorney to file their bankruptcy, that they no longer need to worry about collection lawsuits. While this may be the case sometimes, it is always best to discuss these matters with your attorney. For example, in Ohio, if a person has been ordered to appear for what is called a judgment debtor’s examination, failure to appear could be contempt of court and an arrest warrant could be issued. Always make sure that you discuss these matters with your attorney before you make any decision about what to do or not do if you have pending court matters.
25. Finally, make sure that your attorney can contact you easily. When preparing a case, attorneys and their staff frequently have questions. Make sure that your attorney can always reach you so that your case is not unnecessarily delayed.
Many of the foregoing suggestions are nothing more than common sense. However, in bankruptcy, many things that you might think are common sense actually turn out to work in a much different and sometimes surprising way. Bankruptcy is a complicated and specialized area of the law. Frequently what you have heard from friends and family about bankruptcy is incorrect. Always trust the advice of your attorney who has your best interest in mind.